Accounting - Study Mode
[#1946] The expenses related to the main operations of a business are referred to as
Correct Answer
(D) Operating expense
Explanation
Solution: The expenses related to the main operations of a business are referred to as Operating expense. The operating expenses refer to the specific costs after gross revenue is defined in the income statement.
[#1947] A current asset that is convertible to cash within 3 months can be referred to as
Correct Answer
(D) Cash equivalent
Explanation
Solution: A current asset that is convertible to cash within 3 months can be referred to as Cash equivalent. Cash and cash equivalents refer to the line item on the balance sheet that reports the value of a company's assets that are cash or can be converted into cash immediately.
[#1948] What is depreciation?
Correct Answer
(D) Portion of a fixed asset's cost consumed during the current accounting period
Explanation
Solution: Portion of a fixed asset's cost consumed during the current accounting period is known as depreciation. Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account for declines in value. Businesses depreciate long-term assets for both tax and accounting purposes.
[#1949] Under which depreciation method, the amount of depreciation expenses remains same throughtout the life of the asset?
Correct Answer
(A) Straight line method
Explanation
Solution: Under Straight line method, the amount of depreciation expenses remains same throughtout the life of the asset. In a straight line depreciation method, it is assumed that the asset uniformly depreciates over its useful life.
[#1950] Security premium is a
Correct Answer
(A) Capital receipt