The Approach to Preparing Financial Statements Based on Recognizing Revenues

question 149

Multiple Choice

The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:

• A) Cash basis accounting.
• B) The matching principle.
• C) The time period assumption.
• D) Accrual basis accounting.
• E) Revenue basis accounting.

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Definitions:

Risk Management

The process of identifying, assessing, and prioritizing risks followed by coordinated efforts to minimize, monitor, and control the probability or impact of unfortunate events.

Insurance Company

An entity that provides financial compensation to individuals or entities against losses from specified risks in exchange for premiums.

Risk Distribution

The practice of spreading financial risk across various parties, investments, or financial instruments to reduce the impact of any one failure.

Age Misrepresentation

The act of deliberately falsifying one's age, usually for the purpose of gaining access to certain privileges or avoiding restrictions.