The Continuity Assumption Is the Basis for the Rule That

question 28

Multiple Choice

The continuity assumption is the basis for the rule that:

• A) the income statement should not include material gains and losses that are both unusual and infrequent.
• B) treasury stock should not be reported in the balance sheet as an asset.
• C) the cost of installing a machine should not be included in the recorded cost of the machine, but rather expensed immediately.
• D) the cost of operational assets should be allocated to expense systematically and rationally over their useful lives.

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Definitions:

Market Share

The share of a market that a certain company or product holds, frequently quantified as a proportion of the market's total sales.

Near-monopolies

Companies or entities that dominate a market to such an extent that they face little competition, often controlling prices and supply in the market.

Oligopolistic Competition

A market structure in which a few large firms dominate the market, with limited competition between them.

Positive Sum Game

A situation in which all participants can gain or benefit in some way, in contrast to a zero-sum game where one's gain is exactly balanced by another's loss.