According to FASB Concept Statement No

question 49

Multiple Choice

According to FASB Concept Statement No.5,Recognition and Measurement in Financial Statements of Business Enterprises,an expense is recognized when

• A)the benefit of a liability has been reduced
• B)an asset has been acquired
• C)the benefit of an asset has been reduced
• D)a liability has been incurred
• E)the benefit of an asset has been acquired
• F)both A and C
• G)both C and D

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Definitions:

Absolute Advantage

Situation in which Country 1 has an advantage over Country 2 in producing a good because the cost of producing the good in 1 is lower than the cost of producing it in 2.

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost than another entity, leading to potential gains from trade.

Production Relationships

The connections between various factors of production, including labor, capital, and technology, and how they influence the output of goods and services.

Production Possibilities Frontier

A curve showing the maximum attainable combinations of two products that may be produced with available resources and current technology.