Under Both GAAP and IFRS, If a Company Believes That

question 11

True/False

Under both GAAP and IFRS, if a company believes that a long-term contract will lose money, it must recognize the expected losses immediately, and should not allocate any losses to future periods.

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Definitions:

Net Fixed Assets

The value of a company's property, plant, and equipment minus depreciation, indicating the tangible assets used in operations.

Receivables Turnover

A ratio that measures a company's efficiency in collecting its sales on credit over a period of time.

Accounts Receivable

Funds owed to a company by customers for products or services that have been delivered or used but not yet paid for.

Equity Multiplier

This financial ratio measures a company’s total assets financed by stockholders, indicating the leverage level relative to equity.