The transaction approach to determining income is a concept in which
A) income is measured as the amount that an entity could consume during a period and be as well off at the end of that period as it was at the beginning.
B) the financial statement effects of business events are classified as revenues,gains,expenses,and losses,which are used to measure and define income.
C) market values adjusted for the effects of inflation or deflation are used to calculate income.
D) income equals the change in market value of the firm's outstanding common stock for the period.

Question

Quizplus · Accepted Answer

The transaction approach to determining income is based on the idea that income is measured by identifying and categorizing the financial statement effects of business events, such as revenues, gains, expenses, and losses. These categories are then used to determine the overall net income or loss for a given period. This approach is widely used in accounting and financial reporting, and is considered to be a reliable way to accurately measure an entity's income. Option A is a concept related to the concept of welfare economics, and is not directly related to the transaction approach to determining income. Option C involves adjusting market values, which is not generally used in the transaction approach. Option D refers specifically to the change in market value of a company's common stock, which is unrelated to the transaction approach to determining income.

The Transaction Approach to Determining Income Is a Concept in Which