In Accordance with the Conceptual Framework, Income Is Recognised in the Statement

question 5

Multiple Choice

In accordance with the conceptual framework, income is recognised in the statement of profit or loss and other comprehensive income when:

• A) an decrease in future economic benefits relating to an decrease in an asset or an increase in a liability can be measured reliably.
• B) an increase in future economic benefits relating to an increase in an asset or a decrease in a liability can be measured reliably.
• C) an increase in future economic benefits relating to an increase in an asset can be measured reliably.
• D) an increase in future economic benefits relating to an decrease in an asset or a increase in a liability can be measured reliably.

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Definitions:

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects revenue from its credit sales, calculated by dividing net credit sales by the average accounts receivable.

Net Credit Sales

The total value of sales made on credit during a period, minus any sales returns or allowances.

Accounts Receivable

Outstanding payments from clients or customers to a company for delivered goods or services that remain unpaid.

Factoring Transaction

The process where a business sells its accounts receivable (invoices) to a third party (factor) at a discount, in exchange for immediate cash.