A Stock Is

question 18

Multiple Choice

A stock is

• A) a certificate that certifies ownership of a certain portion of a company.
• B) document verifying a loan to a company.
• C) a promise of capital gains to its owner.
• D) a retained earning of a corporation.

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Definitions:

Lower-Of-Cost-Or-Market Basis

An accounting principle where inventory is recorded at either its historical cost or market value, whichever is lower, to ensure conservatism.

Conservatism

An accounting principle that requires potential expenses and liabilities to be recognized immediately, but revenue only when it is ensured.

Accounting Concept

Fundamental principles or theories that underpin the practice and procedure of accounting.

Manufacturing Business

This type of business produces goods from raw materials through a combination of manual labor and machines.