Which of the Following Constitutes a Realization

question 113

Multiple Choice

Which of the following constitutes a realization?
I.Frank's lakeside cottage is damaged in a violent storm. The cost of repairs totaled $4,000. However, the insurance company gives Frank only $2,500 for the repairs.
II.McDonald's cow gives birth. The calf will become a member of McDonald's feeder cattle herd.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Land

A fixed asset category representing the ownership of a physical parcel of the earth's surface which is used in operations and has an indefinite useful life.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency of the company.

Inventory

The total value of a company's raw materials, work-in-progress, and finished goods that are considered assets on a balance sheet.

Account Receivable

Amounts owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.