Which Accounting Convention Could Cause an Overload of Information for the Financial

question 37

Multiple Choice

Which accounting convention could cause an overload of information for the financial statement user?

• A)Consistency
• B)Conservatism
• C)Full disclosure
• D)Materiality

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Definitions:

Sales Commissions

A form of compensation to salespersons for their sales achievements, usually calculated as a percentage of the sales they generate.

Net-of-Tax Basis

A method of presenting financial figures after the effect of taxes has been considered or deducted.

Depreciable Equipment

Tangible assets, such as machinery or hardware, acquired for use in operations, which lose value over time due to usage, wear and tear, or obsolescence and can be depreciated.

Prior-Period Adjustment

Corrections of errors made in previously published financial statements, not considered ordinary adjustments.