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Question 1: According to the FASB conceptual framework, the process of reporting an item in the financial
statements
of an entity is:
A. Allocation.
B. Matching.
C. Realization.
D. Recognition.
Correct Answer: D
Explanation:
Choice "d" is correct. Recognition is the process of recording an item in the financial statements of an
entity. SFAC 5 para. 6 Choice "a" is incorrect. Allocation is the accounting process of assigning or
distributing an amount according to a plan or a formulA. SFAC 6 para. 142 Choice "b" is incorrect.
Matching of costs and revenues is simultaneous or combined recognition of the revenues and
expenses
that result directly and jointly from the same transactions or other events. SFAC 6 para. 146 Choice
"c" is
incorrect. Realization is the process of converting noncash resources and rights into money. SFAC 6
para.
1 43
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