Which of the Following Is Not True Regarding the Asset-Liability

question 36

Multiple Choice

Which of the following is not true regarding the asset-liability approach to defining accounting elements?

• A)The asset-liability approach focuses on the measurement of net assets.
• B)The asset-liability approach is arguably superior to the revenue-expense approach.
• C)The asset-liability approach is the basic orientation of current financial reporting practices.
• D)SFAS No. 109 uses the asset-liability approach by focusing income tax accounting on the recognition of tax assets and liabilities.

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Definitions:

ATC

Average Total Cost, the total cost divided by the quantity of output produced; it's a measure of per-unit production cost.

MC

Short for marginal cost, it represents the change in total cost that arises when the quantity produced is incremented by one unit.

Herfindahl Index

An economic measure of market concentration, calculated by summing the squares of the market shares of all competitors within an industry.

Industry Concentration

A measure of the extent to which a small number of firms dominate the total production, sales, or market share in an industry.