The recognition criteria that must be satisfied under the Conceptual Framework for an expense to be included in the income statement is:
A)Probable that the outflow of resources has occurred.
B)Outflow of resources able to be reliably measured.
C)Outflow of resources virtually certain.
D)Both A and B.

Question

Quizplus · Accepted Answer

According to the Conceptual Framework, an expense should be recognized in the income statement when it satisfies two criteria: (A) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and (B) the amount of the obligation can be measured with reliability. Both options A and B must be satisfied before an expense can be included in the income statement. Therefore, choice D is the correct answer.

The Recognition Criteria That Must Be Satisfied Under the Conceptual