Which of the Following Is One of the Conditions for Recognition

question 57

Multiple Choice

Which of the following is one of the conditions for recognition of an expense?

• A)There is a reasonable expectation that cash will be paid.
• B)The expense will be recognized only when cash is paid.
• C)The goods will be delivered or the services will be provided within the accounting cycle.
• D)The goods or services are used to produce revenue.

---

Definitions:

Net Operating Income

A company's revenue minus its operating expenses, excluding tax and interest, representing the profit from core business operations.

Sales Increase

A rise in the amount of products or services sold by a business within a specific period, indicating growth or an uptick in market demand.

Degree of Operating Leverage

A financial ratio that measures how sensitive a company's operating income is to changes in revenue, indicating risk level.

Variable Expenses

Costs that vary in total in direct proportion to changes in an activity level or volume, such as materials and labor costs.