Which of the Following Is an Assumption Made When Preparing

question 171

Multiple Choice

Which of the following is an assumption made when preparing the financial statements?

• A) Financial statements are prepared for a specific entity that is distinct from the entity's owners.
• B) The current market value is assumed to be more relevant than the original cost paid.
• C) The preparation of financial statements for a specific time period assumes that the balance sheet covers a designated period of time.
• D) Financial statements are prepared assuming that inflation has a distinct effect on the monetary unit.

Recognize and describe specific language and style appropriate for different types of communication.

Distinguish between the proofreading needs of routine versus complex documents.

Identify the characteristics of social media communication.

Evaluate the effectiveness of different proofreading strategies.

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Definitions:

Investing Cash Flow

Cash inflows and outflows related to transactions involving the acquisition and disposal of long-term assets and investments not included in cash equivalents.

AASB 107

An Australian accounting standard that specifies how the movements in cash and cash equivalents should be presented in the statement of cash flows.

Direct Method

A way to present the cash flow statement, showing actual cash flows from operating activities instead of adjusting net income for accruals.

Operating Activities

The principal revenue-producing activities of an entity and other activities that are not investing or financing activities.