A Crucial Question Concerning Income Is When to Recognize It

question 20

Multiple Choice

A crucial question concerning income is when to recognize it (in which accounting period income should income be taxed?) . Which of the following help resolve the problems of timing?
I.Realization Concept.
II.Accounting Method.
III.Constructive Receipt.
IV.Substance-Over-Form Doctrine.
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• A)Statements I and II are correct.
• B)Only statement I is correct.
• C)Only statement II is correct.
• D)Statements I, II, and III are correct.
• E)Statements I, II, III, and IV are correct.

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Definitions:

Annual Interest

The interest amount accumulated over one year on borrowed funds or investments.

Effective-Interest Method

A way of calculating the amortized cost of a bond and the amount of interest expense over its life, reflecting the constant rate of interest over the period.

Bond Discount Amortization

The process of gradually writing off the discount on a bond over the life of the bond, reflecting the increase in its value as it nears maturity.

Carrying Value

The net amount at which an asset is valued on the balance sheet, taking into account depreciation, amortization, and impairment costs.