If It Is Not Probable That Expenditure Will Generate Future

question 4

Multiple Choice

If it is not probable that expenditure will generate future benefits,the accounting treatment should be:

• A) to treat it as a deferred asset.
• B) to amortise it over a period of no more than two operating cycles.
• C) to expense it.
• D) to treat it as unearned revenue.

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Definitions:

Documentary Collection

A financial transaction in which a seller instructs their bank to forward documents related to the export of goods to the buyer's bank with instructions for payment.

Commercial Letter

A document used in international trade, containing information about a transaction or agreement between businesses.

Mutual Funds

Investment programs funded by shareholders that trade in diversified holdings and are professionally managed.

Exchange-Traded Funds

Investment funds that are tradeable on stock exchanges, similar to stocks, and hold assets such as stocks, commodities, or bonds.