Application of the (Prudence)conservatism Assumption Can Produce

question 56

Multiple Choice

Application of the (prudence) conservatism assumption can produce:

• A)higher profits.
• B)higher values for assets.
• C)higher amounts for liabilities.
• D)lower amounts for expenses.

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Definitions:

Common Stock

Equity ownership in a corporation, with voting rights and eligibility to receive dividends.

Cash

Currency available for use in transactions or deposits, represented by coins or banknotes.

Paid-in Capital in Excess

The amount of shareholder equity that exceeds the par value of the shares issued.

Subscriptions Receivable-Common Stock

An account reflecting the amounts due from subscribers who have committed to purchase common stock, not yet paid for.