CFA® Level 1 Exam: Which Statement is True?

CFA® Level 1 Exam

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Question

Which of the following statements is true?

Answers

A. Recognition is concerned with recognizing a liability from a current cash receipt.

B. The Accrual process would reduce an asset that is recorded as a result of a cash payment.

C. Realization is the process of converting non-cash resources and rights into money.

D. All of these are true.

E. Allocation is the process of formally recording or incorporating an item in the financial statements of an entity.

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Explanations

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A. B. C. D. E.

Realization is the process of converting non-cash resources and rights into money and is most precisely used in accounting and financial reporting to refer to sales of assets for cash or claims to cash.

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