What Accounting Concept Justifies the Use of Accruals and Deferrals

question 79

Multiple Choice

What accounting concept justifies the use of accruals and deferrals?

• A) Going-concern assumption
• B) Corporate form of organization
• C) Consistency characteristic
• D) Arm's-length transactions

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Definitions:

Borrowing

the act of obtaining funds from another party, often a financial institution, with the promise of repayment plus interest at a future date.

Selling Stocks

The act of disposing of equity shares in a company, typically to realize gains or raise capital.

Comparative Balance Sheets

Financial statements that provide a side-by-side comparison of a company’s balance sheets for two or more periods, allowing for analysis of trends over time.

Retained Earnings

The portion of net income that is not distributed to shareholders but instead is reinvested in the business or used to pay off debt.