The Accounting Convention That States That Every Transaction Has at Least

question 40

Multiple Choice

The accounting convention that states that every transaction has at least two effects on the accounting equation, so that after the transaction is processed, the equation remains in balance is the:

• A)going concern/continuity convention.
• B)objectivity/reliability convention.
• C)conservatism/prudence convention.
• D)dual aspect convention.

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Definitions:

Liability Reported

The recording of an obligation or debt that a company owes to outside parties in the financial statements.

Balance Sheet

A financial record that lists a corporation's assets, obligations, and the equity held by shareholders at a particular time.

Incremental Borrowing Rate

The interest rate a lessee would have to pay to borrow on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment.

Balance Sheet

A financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time, providing insight into its financial condition.