In Relation to the Concept of Recognition of an Item

question 13

Multiple Choice

In relation to the concept of recognition of an item in the financial statements:

• A) Items of equity must satisfy both the probability and measurement criteria before they can be recognised.
• B) Assets can only be recognised where there is a high probability of future economic benefits flowing to the entity.
• C) Expenses are recognised when a decrease in a future economic benefit related to an increase in an asset or a decrease in a liability has arisen that can be measured reliably.
• D) For items to qualify for recognition in the financial statements as liabilities or income they must first satisfy the definition of an element, and then meet both the probability and measurement requirements in relation to recognition.

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Definitions:

Business Organization

The legal and structural form taken by a business, such as a corporation, partnership, or sole proprietorship, defining its legal responsibilities and operations.

Professional Corporation

A corporation composed of professionals (such as lawyers, doctors, accountants) who offer their services to the public.

Attorney

A professional licensed to practice law, providing legal advice, and representing individuals and entities in legal matters.

Agent

An individual or entity authorized to act on behalf of another person or entity in contractual or legal matters.