Depreciating Equipment Over Its Useful Life Is an Example of

question 49

Multiple Choice

Depreciating equipment over its useful life is an example of

• A) following the objectivity assumption.
• B) applying the matching principle.
• C) applying the realization principle.
• D) applying the conservatism convention.

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Definitions:

Conservative

In finance, conservative refers to an investment strategy or financial decision-making approach that prioritizes preservation of capital and minimizes risk.

Net Working Capital

The disparity between an organization's immediate assets and liabilities, showcasing its financial stability in the short-term.

Accounts Payable

Short-term liabilities or the money a company owes to suppliers or vendors for goods and services that were purchased on credit.

Inventories

Quantifiable goods or materials that a business holds with the intent of selling them in the course of business operations, constituting a significant portion of a company's assets.