A Normative Statement

question 158

Multiple Choice

A normative statement

• A) depends on someone's values.
• B) cannot use the word "should."
• C) says what is currently believed about the way the world operates.
• D) must be tested to determine if it is correct.
• E) can be tested to determine if it is correct.

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Definitions:

Depreciation

The systematic reduction in the recorded cost of a fixed asset to allocate its cost over its useful life, reflecting wear and tear, deterioration, or obsolescence.

Current Asset

An asset that is expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of a business.

Cash Dividends

Payments made by a corporation to its shareholder members from the company's current or retained earnings.

Capital Stock

Reflects the amount of equity financing a company has generated through the sale of its shares to investors.