Responsibility for Selection of the Depreciation Methods Used in Financial

question 132

Multiple Choice

Responsibility for selection of the depreciation methods used in financial reporting rests with:

• A) Company management.
• B) The accounting standard body.
• C) The tax authority.
• D) The CPA firm that audits the company's financial statements.

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Definitions:

Cash Over and Short

An account used to report the discrepancies between the physical cash on hand and the recorded amounts in the books.

Cash Sales

Transactions where payment is made by the customer at the time of purchase, involving immediate transfer of cash.

Accounts Receivable

Money owed to a company by its customers for products or services that have been delivered or used but not yet paid for.

Liquidity of Receivables

Indicates how quickly receivables can be turned into cash, reflecting a company's efficiency in managing credit it extends to customers.