Which of the Following Concepts States That a Company Must

question 8

Multiple Choice

Which of the following concepts states that a company must perform strictly proper accounting ONLY for significant items?

• A)Consistency principle
• B)Accounting conservatism
• C)Disclosure principle
• D)Materiality concept

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Definitions:

Operating Activities

Day-to-day actions that are involved in running a company, such as selling products, managing expenses, and paying employees, which are reflected in the cash flow statement.

Direct Method

A cash flow statement preparation approach that lists major categories of gross cash receipts and payments, offering a more straightforward view of a company’s cash flow from operational activities.

Indirect Method

A way to report cash flows from operating activities by starting with net income and adjusting for non-cash transactions.