If a Company Prepares Its Financial Statements Three Years After

question 48

Multiple Choice

If a company prepares its financial statements three years after the end of their accounting period, they have violated the qualitative characteristic of :

• A) understandability.
• B) timeliness.
• C) verifiability.
• D) full disclosure.

---

Definitions:

Straight-Line Method

A method of calculating depreciation by distributing the cost evenly across an asset's useful life.

Expense Recognition

The principle that expenses are recognized when they contribute to the generation of revenue, not necessarily when the cash is paid.

Systematic Allocation

The process of methodically spreading costs or revenues over a specific period of time or among different departments or products.