The Continuity Assumption Is the Basis for the Rule That

question 28

Multiple Choice

The continuity assumption is the basis for the rule that:

• A) the income statement should not include material gains and losses that are both unusual and infrequent.
• B) treasury stock should not be reported in the balance sheet as an asset.
• C) the cost of installing a machine should not be included in the recorded cost of the machine, but rather expensed immediately.
• D) the cost of operational assets should be allocated to expense systematically and rationally over their useful lives.

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Definitions:

Congenital Aortic

Refers to any birth defect of the aorta, the major artery carrying blood from the heart to the rest of the body, which can affect blood flow and circulation.

Septum

A wall or partition dividing a body space or cavity, such as the nasal septum which divides the nostrils.

Uterus

A female reproductive organ where the fetus develops during pregnancy.

Urethrotrigonitis

An inflammation of the urethra and the trigone area of the bladder, often causing urinary discomfort.