Which of the following statements is not true in measuring earnings? Capital mai
ID: 2563690 • Letter: W
Question
Which of the following statements is not true in measuring earnings?
Capital maintenance approach is more related to measurement problem, while transaction approach is more related to revenue recognition issues.
For the income measurement, there are two approaches such as trasaction and capital maintenance
the transaction approach is more focused on the accounts on balance sheet.
The current GAAP is more based on the transaction approach
a.Capital maintenance approach is more related to measurement problem, while transaction approach is more related to revenue recognition issues.
b.For the income measurement, there are two approaches such as trasaction and capital maintenance
c.the transaction approach is more focused on the accounts on balance sheet.
d.The current GAAP is more based on the transaction approach
Explanation / Answer
Ans: c. Transaction approach is more focused on the accounts on balance sheet is not true in measuring earnings.
Under transaction approach,income is calculated by analyzing the effects of revenue and expense transaction during a period. Capital maintenance approach is balance sheet approach in measuring income.
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