The Framework adopts which approach to determining profits.
A)Revenue/expense approach.
B)Matching principle approach.
C)Asset/liability approach.
D)Cash basis approach.
E)None of the given answers

Question

Quizplus · Accepted Answer

The question seems to be referring to a specific "Framework," which is likely the Conceptual Framework for Financial Reporting under International Financial Reporting Standards (IFRS) or the Financial Accounting Standards Board (FASB) Conceptual Framework for Financial Reporting under US Generally Accepted Accounting Principles (GAAP).
Both of these frameworks adopt an "asset/liability approach" to determining profits. This approach recognizes income when it increases economic benefits and recognizes expenses when they decrease economic benefits, regardless of when cash is received or paid. This is in contrast to the cash basis approach, which recognizes income and expenses only when cash is received or paid.
Therefore, the answer to the question is:
3. Asset/liability approach.

The Framework Adopts Which Approach to Determining Profits