Which of the following approaches to income measurement underlies financial accounting and reporting?
A) Physical capital maintenance approach
B) Economic approach
C) Valuation approach
D) Transaction approach

Question

Quizplus · Accepted Answer

The transaction approach, which focuses on recording and reporting individual transactions, is the approach that underlies financial accounting and reporting. This approach is used to provide accurate and reliable financial information to investors, creditors, and other stakeholders. The other approaches listed (physical capital maintenance, economic, and valuation) are used in other fields or for other purposes.

Which of the Following Approaches to Income Measurement Underlies Financial