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Test: Analysis of Operating Decisions - B Com MCQ


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10 Questions MCQ Test - Test: Analysis of Operating Decisions

Test: Analysis of Operating Decisions for B Com 2024 is part of B Com preparation. The Test: Analysis of Operating Decisions questions and answers have been prepared according to the B Com exam syllabus.The Test: Analysis of Operating Decisions MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Analysis of Operating Decisions below.
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Test: Analysis of Operating Decisions - Question 1
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Which approach to income measurement emphasizes the reporting of transactions and matches revenues and costs for deriving accounting income?

Detailed Solution for Test: Analysis of Operating Decisions - Question 1
The transaction approach to income measurement focuses on reporting transactions, matching revenues and costs to derive accounting income. This approach associates effort and accomplishment by recognizing revenues and expenses as they arise from external transactions.
Test: Analysis of Operating Decisions - Question 2
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Which income measurement approach considers income to arise from specific activities and events rather than just transactions?

Detailed Solution for Test: Analysis of Operating Decisions - Question 2
The activities approach to income measurement emphasizes income arising from specific events and activities within a firm, expanding on the transaction approach. It focuses on real-world events or activities that contribute to income.
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Test: Analysis of Operating Decisions - Question 3
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Under the percentage of completion method, revenue recognition occurs based on:

Detailed Solution for Test: Analysis of Operating Decisions - Question 3
The percentage of completion method recognizes revenue based on the cost incurred to estimated total cost. This method is commonly used for long-term projects and estimates the percentage of the project completed, allowing for revenue recognition as progress is made.
Test: Analysis of Operating Decisions - Question 4
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Which approach to income measurement recognizes revenue only when all costs incurred for a project have been recouped?
Detailed Solution for Test: Analysis of Operating Decisions - Question 4
The cost recoverability method recognizes revenue only when all costs incurred for a project have been recouped. This conservative approach ensures that no profit is recognized until expenses are fully recovered.
Test: Analysis of Operating Decisions - Question 5
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Under the activities approach, income is recognized based on:
Detailed Solution for Test: Analysis of Operating Decisions - Question 5
The activities approach recognizes income based on real-world events and activities, rather than just transactions. It focuses on the description of activities within a firm and their contribution to income.
Test: Analysis of Operating Decisions - Question 6
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Which income measurement approach is also known as the capital maintenance approach?
Detailed Solution for Test: Analysis of Operating Decisions - Question 6
The balance sheet approach, also known as the capital maintenance approach, measures income by determining the net increase in assets for a specific accounting period while maintaining the capital intact.
Test: Analysis of Operating Decisions - Question 7
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The primary advantage of the transaction approach to income measurement is:
Detailed Solution for Test: Analysis of Operating Decisions - Question 7
The primary advantage of the transaction approach is the efficient recording and analysis of external transactions. It provides a basis for efficient managerial work by focusing on revenues and costs related to external transactions.
Test: Analysis of Operating Decisions - Question 8
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Deferred charges are expenditures that are carried on the balance sheet as an asset until:
Detailed Solution for Test: Analysis of Operating Decisions - Question 8
Deferred charges are carried on the balance sheet as an asset until the underlying asset is fully consumed. Once consumed, they are reclassified as expenses in the current period.
Test: Analysis of Operating Decisions - Question 9
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Non-recurring items on the income statement are:
Detailed Solution for Test: Analysis of Operating Decisions - Question 9
Non-recurring items on the income statement are not expected to occur regularly and are ignored for analyzing sustainable profitability. They are often excluded by analysts seeking to understand the true ongoing performance of a company.
Test: Analysis of Operating Decisions - Question 10
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Which method of revenue recognition is commonly used for real estate transactions when cash collection is uncertain?
Detailed Solution for Test: Analysis of Operating Decisions - Question 10
The installment approach to revenue recognition is commonly used for real estate transactions when cash collection is uncertain. Revenue and gross profit are recognized proportionally to the cash received.
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