The Characteristic of Accounting Information That Requires Financial Reports to Be

question 52

Multiple Choice

The characteristic of accounting information that requires financial reports to be expressed as clearly as possible and to be capable of being understood by those they are addressed to, is known as:

• A)understandability.
• B)reliability.
• C)cost versus benefit test.
• D)relevance.

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Definitions:

Purchase

The act of buying goods or services, often reflected in the financial transactions of a business.

Sale

A transaction between two parties where the buyer receives goods, services, or assets in exchange for money.

Equity Interest

An ownership interest in a company, represented by stock or shares, entitling the holder to a claim on assets and profits.

Cash Dividend

A payment made by a company out of its profits to its shareholders in the form of cash.