Which Accounting Principle Is Designed to Prevent Abuses of Flexibility

question 3

Multiple Choice

Which accounting principle is designed to prevent abuses of flexibility in revenue recognition?

• A) Consistency principle
• B) Accrual principle
• C) Going concern principle
• D) Matching principle

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Definitions:

Equilibrium Quantity

The amount of products or services available matches the amount desired by consumers at the current market rate.

Price Ceilings

Government-imposed limits on how high prices for essential goods or services can be, intended to protect consumers from price gouging during shortages or crises.

Quantity Supplied

The amount of a product that producers are willing and able to sell at a particular price over a given period of time.

Quantity Demanded

The complete volume of a merchandise or service buyers intend to acquire at a determined price.