The Recognition of an Element of a Financial Statement Is

question 16

Multiple Choice

The recognition of an element of a financial statement is:

• A) a description of the element in the notes to the financial statement
• B) an action or process to record the transaction or event in the accounting records
• C) a statement identifying the characteristics that an element must have
• D) both A and C

---

Definitions:

NPV Projects

Projects that are evaluated based on the Net Present Value method, which calculates the present value of future cash flows minus the initial investment cost.

Debt/Equity Ratio

The ratio that highlights the proportional use of debt and shareholders' equity in asset financing for a company.

Stripped Common Shares

Common stock on which dividends and capital gains are repackaged and sold separately.

Dividends

Payments made by a corporation to its shareholders, usually derived from the company's profits, as a reward for investing in the company's equity.