It Was Stated in the Text That Realized Gains from Certain

question 118

Multiple Choice

It was stated in the text that realized gains from certain types of transactions (e.g., like-kind exchanges) are deferred for recognition in a future period. The basis of this treatment is the
I.Annual Accounting Period Concept.
II.Legislative Grace Concept.
III.Wherewithal-to-Pay Concept.
IV.Capital Recovery Concept.
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• A)Only statement II is correct.
• B)Only statement III is correct.
• C)Statements I and II are correct.
• D)Statements II and III are correct.
• E)Statements I, II, III and IV are correct.

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Definitions:

Comparative Balance Sheet

A financial statement that presents the company's financial position at two or more points in time, facilitating the analysis of trends and changes.

Cash Dividends

Payments made by a corporation to its shareholder members, usually in the form of cash from its current or retained earnings.

Operating Activities

Transactions and events that affect the net income of a business, involving the primary revenue-producing activities of the entity.

Indirect Method

A method used in cash flow statement preparation that starts with net income and adjusts for changes in balance sheet accounts to arrive at cash provided by operating activities.