Which of the Following Is a Value Judgment Found in SFAC

question 26

Multiple Choice

Which of the following is a value judgment found in SFAC No. 1?

• A)Accounting reports should become the only relevant source of information about enterprises.
• B)Cash basis accounting is extremely useful in assessing and predicting earning power and cash flows of an enterprise.
• C)Information is not costless to provide, so benefits of usage should exceed costs of production.
• D)Users of accounting information have limited ability regarding financial information and reporting.

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Definitions:

Capital Expenditures

The costs of acquiring fixed assets, adding to a fixed asset, improving a fixed asset, or extending a fixed asset’s useful life.

Fixed Asset

Long-term tangible property that a company owns and uses in its operations to generate income, such as buildings, machinery, and equipment, which are not expected to be consumed or converted into cash within a year.

Property, Plant, Equipment

Long-term assets held for business use and not intended for resale, such as buildings, machinery, and vehicles, subject to depreciation.

Depreciated

A decrease in the value of an asset over time due to wear and tear or obsolescence.