Which of the Following Statements Is INCORRECT in Relation to the Recognition

question 6

Multiple Choice

Which of the following statements is INCORRECT in relation to the recognition criteria for elements of the financial statements?

• A) Assets are recognised when it is probable that future economic benefits will flow to the entity and the asset has a cost or value that can be measured reliably.
• B) Because equity is the arithmetic difference between assets and liabilities, a separate recognition criteria for equity is not needed in The Framework.
• C) Liabilities are recognised when it is probable that an outflow of resources embodying economic benefits will result from the settlement of a present obligation and the amount at which settlement will take place can be measured reliably.
• D) Income is recognised when an increase in future economic benefits related to a decrease in an asset or an increase in a liability that has arisen can be measured reliably.

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Definitions:

Collagen

A protein essential for supporting the structure of the skin, bones, tendons, and ligaments, and is the most abundant protein in mammals.

Rheumatoid arthritis

An autoimmune disease that causes chronic inflammation of the joints, often resulting in pain and deformity.

Osteoarthritis

A degenerative joint disease characterized by the breakdown of joint cartilage and underlying bone, leading to pain and stiffness, primarily in the hips, knees, and thumbs.

Septic arthritis

An infection in a joint causing inflammation, usually caused by bacteria, but sometimes viruses or fungi, characterized by severe pain, swelling, and redness.