Income Statement

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  • #242872

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    walid zaky
    Participant
    52. Question ID: HOCK MP2 AF11 (Topic: Income Statement) 

    According to the FASB conceptual framework, revenue may result from

    • A. An increase in a liability from incidental transactions.
    • B. A decrease in an asset from primary operations.wrong
    • C. An increase in an asset from incidental transactions.
    • D. A decrease in a liability from primary operations.
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  • #242880

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    Lynn Roden
    HOCK international

    Hello walid zaky,

    A decrease in an asset would be, for example, writing down the value of inventory because it has become obsolete. Another example is depreciation, which decreases the book value of a fixed asset. Both of those transactions involve a decrease of an asset (a credit) and an increase in expense (a debit). Therefore, a decrease in an asset from primary operations would not result in revenue. It would result in an expense.

    Lynn

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