Which of the Following Principles States That a Business's Financial

question 41

Multiple Choice

Which of the following principles states that a business's financial statements must report enough information for outsiders to make knowledgeable decisions about the company?

• A) conservatism
• B) materiality concept
• C) disclosure principle
• D) consistency principle

Understand the inventory and accounts receivable turnover ratios to evaluate how efficiently a company manages its stock and collects receivables.

Calculate and analyze the return on assets to measure how efficiently a company uses its assets to generate profits.

Understand the concept of comprehensive income and the items included in it.

Identify and explain the components and significance of discontinued operations in financial statements.

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Definitions:

Cereal Company

A business entity that manufactures, markets, and sells cereal products, which are typically grain-based foods consumed for breakfast.

Exchange Rates

The value of one currency expressed in terms of another currency.

Bretton Woods Accord

An agreement established in 1944 that set the exchange rate system and established the International Monetary Fund and the World Bank.

Fixed

Expenses that remain constant for a period of time and do not vary with production levels or sales volume.