Each Year There Was an Increase in the Market Value

question 10

Multiple Choice

Each year there was an increase in the market value of some stock owned by the Mudstream Company,but the accountant did not record the increase in asset value and equity until the stock was sold.In this situation,the accountant

• A) followed the matching principle.
• B) followed the realization principle.
• C) violated the accrual principle.
• D) violated the matching principle.

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Definitions:

Average Cost Method

An inventory costing method where the cost of goods sold and ending inventory values are determined by calculating the average cost of all similar items in the inventory.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, after accounting for purchases and sales during the period.

Toasters

Electrical appliances designed for browning slices of bread through the application of radiant heat.

Inventory Balance

The total value or quantity of all the goods and materials held by a company or business for the purpose of resale or production.