What Has the Accounting Profession Adopted to Guide the Practice

question 124

Multiple Choice

What has the accounting profession adopted to guide the practice of financial accounting in order to provide external shareholders with relevant,reliable,consistent,and comparable financial information?

• A)formal accounting rules and procedures (FARP)
• B)standardized accounting procedures (SAP)
• C)generally accepted accounting principles (GAAP)
• D)general accounting rules for financial statements (GARFS)

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Definitions:

Cost of Equipment

The original value of equipment, including purchase price and any other expenses required to get the equipment ready for its intended use.

Expensed

Expensed is the recognition of a cost as an expense on the income statement in the period in which it is incurred, rather than capitalizing it as part of an asset.

Units-of-production Method

a depreciation technique that allocates the cost of an asset over its useful life based on the number of units it produces.

Straight-line Method

A method of calculating depreciation of an asset, which spreads the cost evenly over its useful life.