Which of the Following Is an Illustration of the Classification

question 21

Multiple Choice

Which of the following is an illustration of the classification issue?

• A)At what amount should land be shown on the balance sheet?
• B)At what point should the payment of salaries to employees be recorded?
• C)Should supplies be recorded as an asset or as an expense?
• D)At what point should a bill be paid for the purchase of an item?

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Definitions:

Income Statement

An income statement is a financial report that shows a company's revenues, expenses, and profits over a specific period.

Balance Sheet

A financial statement that provides a snapshot of a company’s assets, liabilities, and equity at a specific point in time.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year.

Acid-test Ratio

A financial metric used to evaluate a company's short-term liquidity position by comparing its most liquid assets (excluding inventory) to its current liabilities.