The Recognition Criteria That Must Be Satisfied Under the Conceptual

question 15

Multiple Choice

The recognition criteria that must be satisfied under the Conceptual Framework for income to be included in the profit report is:

• A)probable that the inflow of resources has occurred.
• B)inflow of resources able to be reliably measured.
• C)income must be matched with expenses.
• D)Both A and B.

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Definitions:

Market Failure

A circumstance where goods and services are distributed ineffectively by a market operating without restrictions, commonly leading to a decline in social welfare.

Allocate Resources

The process of distributing available resources among various competing needs and wants in order to achieve desired outcomes efficiently and effectively.

Efficiently

Attaining the highest level of efficiency by minimizing unnecessary effort or cost.

Externality

A financial consequence related to a product or service that results in advantages or expenses for individuals not involved in making decisions about the amount of production or consumption.