Which Financial Statement Assumption Relates to the Procedure Where a $200

question 38

Multiple Choice

Which financial statement assumption relates to the procedure where a $200 paper shredder with a 5-year useful life is treated as an expense?

• A) monetary
• B) accounting period
• C) materiality
• D) historical cost.

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Definitions:

Gross Debt Service Ratio

A financial ratio that compares an individual's monthly housing costs (including mortgage payments, property taxes, and utilities) to their gross monthly income, used by lenders to assess borrowing capacity.

Gross Monthly Income

The total amount of income earned in a month before taxes and deductions.

Compounded Monthly

Interest or returns on an investment are calculated and added to the principal amount every month.

Amortized

Refers to the process of paying off debt over time in equal installments of principal and interest.