Under Financial Capital Maintenance a Profit Is Considered Earned When

question 6

Multiple Choice

Under financial capital maintenance a profit is considered earned when:

• A)the financial amount of the net assets at the end of the period exceeds the financial amount of net assets at the beginning
• B)the physical productive capacity of the entity at the end of the period exceeds the physical productive capacity at the beginning of the period
• C)the net present value of future expected asset inflows exceeds the net present value of future expected liability outflows
• D)the directors consider that sufficient assets are on hand to pay a dividend without affecting the ability to pay creditor commitments as and when they fall due

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Definitions:

Utility

A measure of satisfaction, usefulness, or value derived from consuming goods and services.

Pleasure

A sense of joy, pleasure, or fulfillment that comes from participating in or experiencing an activity.

Satisfaction

The feeling of pleasure or contentment when needs, expectations, or desires are fulfilled.

Scarcity

The fundamental economic problem of having seemingly unlimited human wants and needs in a world of limited resources.