The Conservatism Constraint

question 194

Multiple Choice

The conservatism constraint:

• A)Requires that when more than one equally likely estimate of amounts is expected to be received or paid in the future,then the less optimistic amount should be used.
• B)Requires that a company use the same accounting methods period after period.
• C)Requires that revenues and expenses be reported in the period in which they are earned or incurred.
• D)Requires that all items of a material nature be included in financial statements.
• E)Requires that all inventory items be reported at full cost.

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Definitions:

Payment

The transfer of money, goods, or services in exchange for a product, service, or fulfillment of a legal obligation.

Sole Proprietorship

A business where the sole owner is responsible for the management and the debts of the business.

Table Router

A power tool used for woodworking that combines the functionalities of a router and a stationary table, allowing for precise routing operations.

Hardwood

A type of wood that comes from angiosperm trees, distinguished by its dense and durable qualities, often used in furniture, flooring, and construction.