15. In 1936 the AICPA recognized the difference in importance between items repo
ID: 2720405 • Letter: 1
Question
15. In 1936 the AICPA recognized the difference in importance between items reported in the balance sheet as current assets and liabilities, and long-term assets and liabilities, for the different users of financial information. They acknowledge that the liquidity of a business was as important, if not more important, than long-term assets and liabilities from the point of view of the
A. debtor
B. common stock shareholder
C. creditor
D. preferred stock shareholder
16. In Accounting Research Bulletin (ARB) 43 intangible assets were originally classified as “Type a” or “Type b” intangibles. Since that time changes have been made to the classification of intangible assets. SFAS 142 issued in 2001 changed the classification of intangibles to which of the following two groups?
A. identifiable and unidentifiable
B. externally acquired and internally developed
C. amortizable and unamortizable
D. indefinite life and finite (definitive) life
Explanation / Answer
15. The liquidity of a business is more important than long term assets to the short term creditors of goods and services. So the statement C is correct in this context.
16.. SFAS 142 further chamged the classification of intangibles on the basis of useful life -whether finite or infinite.
So statement D . is correct in this context.
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