The Use of Deferrals and Accruals Is a Direct Result

question 127

Multiple Choice

The use of deferrals and accruals is a direct result of the:

• A) unit-of-measure assumption.
• B) time period assumption.
• C) cost/benefit constraint.
• D) separate entity assumption.

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Definitions:

Break-Even Lease Payment

The lease payment at which the cost of leasing equals the benefits received, with no net loss or gain from entering into the lease.

Cost of Debt

The effective rate that a company pays on its total debt, representing the interest expense on all outstanding debts.

Marginal Tax Rates

The rate of additional federal income tax that applies to each additional dollar of taxable income, indicating the percentage of tax applied to your income for each tax bracket in which you qualify.

Straight-Line Depreciation

A method of allocating the cost of a fixed asset evenly over its useful life.