Which of the Following Is a True Statement Regarding Expenses

question 105

Multiple Choice

Which of the following is a true statement regarding expenses?

• A) To recognize expenses along with the related revenues means to subtract expenses from related revenues to compute net revenue.
• B) The expense recognition principle is also called the matching principle.
• C) Expenses must be paid immediately.
• D) Expenses must always be less than revenues.

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Definitions:

Discount Rate

The rate applied within discounted cash flow analysis for assessing the present worth of forthcoming cash flows.

Net Present Value

A method of evaluating investments by calculating the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Initial Investment

The initial amount of money spent to start a project, investment, or business, often including costs such as purchasing equipment, property, or technology.

Internal Rate of Return

The discount rate at which the net present value of all the cash flows from an investment or project equals zero, used as a gauge for its profitability.