Which of the Following Is NOT an Example of Applying

question 56

Multiple Choice

Which of the following is NOT an example of applying conservatism in accounting?

• A)Recording contingent losses that are probable.
• B)Expensing all research and development costs are they are incurred.
• C)Using the lower-of-cost-or-market rules for inventory accounting.
• D)Increasing the useful life used in calculating depreciation.

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Definitions:

Equity Method

An accounting technique used by firms to assess the profits earned through their investment in other companies by reporting these earnings as income.

Amortization

The gradual reduction of a debt over a period of time through regular payments.

Equity in Subsidiary Earnings

Equity in subsidiary earnings represents the share of profits (or losses) from a subsidiary that is recognized by the parent company, directly proportional to its ownership stake.

Outstanding Stock

The total number of a company's shares that are currently owned by investors, including restricted shares.