A Broad Principle That Requires Identifying the Activities of a Business

question 154

Multiple Choice

A broad principle that requires identifying the activities of a business with specific time periods such as months, quarters, or years is the:

• A) Operating cycle of a business.
• B) Time period assumption.
• C) Going-concern assumption.
• D) Matching principle.
• E) Accrual basis of accounting.

Calculate Cost of Goods Sold and Gross Profit for different accounting periods.

Identify and apply the correct journal entries for specific merchandising transactions.

Distinguish between various types of inventory and expenses accounts and their impacts on financial statements.

Understand the implications of inventory systems under GAAP and IFRS.

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Definitions:

Assigning

The process of allocating or appointing a particular task, responsibility, or resource to a specific entity or individual.

Cash Inflows

Money or equivalent value received by an entity, typically as a result of its business operations, investments, or financing activities.

Financial Statements

Records that outline the financial activities and condition of a business, government, or individual. These commonly include the balance sheet, income statement, and statement of cash flows.

Certificates of Deposit

Fixed-term financial instruments issued by banks that pay interest until maturity, when they can be redeemed for the original amount plus accrued interest.