The comparison of the beginning and ending capital (net assets)after adjusting for any additional investments or disinvestment during the period, and indicating the difference to be corporate income, is termed the
A)financial capital maintenance concept
B)physical capital maintenance concept
C)transactional approach
D)asset valuation approach

Question

Quizplus · Accepted Answer

The comparison of the beginning and ending capital after adjusting for any additional investments or disinvestment during the period, and indicating the difference to be corporate income, is called the financial capital maintenance concept. This approach focuses on maintaining the purchasing power of the company's capital, rather than considering the physical assets alone. It is an important concept in accounting because it helps companies to measure their true profitability and ensure that they are not being eroded by inflation or other economic factors.

The Comparison of the Beginning and Ending Capital (Net Assets)after