The Accounting Convention That Requires Items in the Statement of Financial

question 72

Multiple Choice

The accounting convention that requires items in the statement of financial position to be valued at their acquisition cost is the:

• A)matching convention.
• B)realisation convention.
• C)money measurement convention.
• D)historic cost convention.

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Definitions:

Incorporation

The process of legally constituting a company or corporation, offering protection to owners from personal liability for the company's debts and obligations.

Capital Loss Carryforward

A provision allowing taxpayers to use a net capital loss in one year to offset a net capital gain in future years, subject to limitations.

Capital Loss Carryback

Capital Loss Carryback is a tax provision allowing taxpayers to apply a net capital loss to past tax years’ returns to receive a tax refund for taxes previously paid on capital gains.

Schedule M-1

is a tax form used by corporations to reconcile income reported on tax returns with income reported on financial statements.