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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Under Statement of Financial Accounting Concepts No. 6, which of the following means the process of formally recording and reporting an item in the financial statements of a company?

  1. a. allocation
  2. b. verification
  3. c. recognition
  4. d. realization

To determine

Identify from the option that states “the process of formally recording and reporting an item in financial statement of a company” under Statement of Financial Accounting Concepts No.6.

Explanation

Justification for the incorrect answer:

Option a:

Allocation refers to the apportionment of resources in an efficient and effective manner as it helps the organization to meet out it goals. Therefore, Option a is an incorrect answer.

Option b:

The accounting information must be verifiable by different knowledgeable and individual person can reach to a confirmation that the given information is fair representation. It is one of the characteristics that help in enhancing the usefulness of the information for decision purpose. Therefore, Option b is an incorrect answer.

Option d:

Realization is an accounting principle were the revenue are recognized when the product is sold or when service is provided...

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