a-2, b-4, c-3, d-1
a-2, b-1, c-4, d-3
a-3, b-4, c-1, d-2
a-3, b-4, c-2, d-1
Answer is Right!
Answer is Wrong!
The correct answer is: C. a-3, b-4, c-1, d-2
- Earning ability of firm is a measure of a company’s profitability. It is calculated by dividing the company’s net income by its total assets.
- Conservatism is a principle of accounting that states that assets and revenues should be recorded at the lowest possible value, and liabilities and expenses should be recorded at the highest possible value.
- Cash profit is the amount of cash that a company generates from its operations. It is calculated by subtracting the cost of goods sold from the company’s revenue.
- Cash flow statement is a financial statement that shows how a company’s cash flows in and out over a period of time. It is divided into three sections: operating activities, investing activities, and financing activities.
- Cash and accrual is a basis of accounting that records revenues when they are earned and expenses when they are incurred.
Here is a brief explanation of each option:
- Option A: a-2, b-4, c-3, d-1. This option is incorrect because it matches “earning ability of firm” with “P/V ratio”. The P/V ratio is a measure of a company’s profitability, but it is not the same as earning ability. Earning ability is a more general term that refers to a company’s ability to generate profits.
- Option B: a-2, b-1, c-4, d-3. This option is incorrect because it matches “conservatism” with “basis of accounting”. Conservatism is a principle of accounting, but it is not the same as basis of accounting. Basis of accounting refers to the method that a company uses to record its financial transactions.
- Option C: a-3, b-4, c-1, d-2. This option is correct because it matches the terms correctly. Earning ability is a measure of a company’s profitability, and it is calculated by dividing the company’s net income by its total assets. Conservatism is a principle of accounting that states that assets and revenues should be recorded at the lowest possible value, and liabilities and expenses should be recorded at the highest possible value. Cash profit is the amount of cash that a company generates from its operations, and it is calculated by subtracting the cost of goods sold from the company’s revenue. Cash flow statement is a financial statement that shows how a company’s cash flows in and out over a period of time, and it is divided into three sections: operating activities, investing activities, and financing activities. Cash and accrual is a basis of accounting that records revenues when they are earned and expenses when they are incurred.
- Option D: a-3, b-4, c-2, d-1. This option is incorrect because it matches “cash profit” with “basis of accounting”. Cash profit is a measure of a company’s cash flow, but it is not the same as basis of accounting. Basis of accounting refers to the method that a company uses to record its financial transactions.