Theoretically,market Values of Assets Are Better for Evaluating the Creation

question 38

True/False

Theoretically,market values of assets are better for evaluating the creation of shareholder wealth than accounting numbers,but accounting numbers are used because they are more readily available.

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Definitions:

Contra Revenue Accounts

Accounts that are used to record reductions in revenue, such as sales returns, allowances, and discounts.

Sales Discounts

Reductions from the listed or invoice price of goods or services, provided by the seller as an incentive for early payment by the buyer.

Cost of Goods Sold

Expenses directly linked to manufacturing goods for sale, covering both the cost of materials used and the wages for labor.

Closing Process

The year-end procedure used in accounting to transfer balances from temporary accounts to permanent accounts, preparing the books for the next fiscal period.