Which Assumption Requires Transactions to Be Recognised in the Accounting

question 17

Multiple Choice

Which assumption requires transactions to be recognised in the accounting reports when they occur and not when the cash is received or paid?

• A) faithful representation.
• B) accounting period.
• C) accrual basis.
• D) accounting entity.

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Definitions:

Small Stock Dividend

A dividend paid in the form of additional shares, typically representing less than a 25% increase in outstanding shares.

Capital In Excess

Funds received by a company from issuing shares that exceed the par value of the shares.

Debt-Equity Ratio

A financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets, often used to assess the company's financial leverage.

Residual Dividend Policy

A strategy where dividends paid to shareholders are based on earnings left over after all operational and investment costs are covered.