The Objectivity Principle

question 236

Multiple Choice

The objectivity principle:

• A)Means that information is supported by independent,unbiased evidence.
• B)Means that information can be based on what the preparer thinks is true.
• C)Means that financial statement should contain information that is optimistic.
• D)Means that a business may not recognize revenue until cash is received.
• E)Means the assets acquired must be recorded at what the company paid for them.

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Definitions:

Common Shares

Equity securities that represent ownership in a company, providing voting rights and potential dividends to shareholders.

Net Income

Net income is the total profit of a company after all expenses and taxes have been deducted from revenue, indicating the company's financial performance over a specific period.

Retained Earnings

The portion of net income that is not distributed to shareholders but is kept by the company to reinvest in its core business or to pay debt.

Net Income

The sum a company holds onto after subtracting expenses and taxes from the total revenue earned.