Which of the following sets of characteristics best help identify a business opportunity?

• A. Market demand, profitability, and feasibility
• B. Double-entry system, accrual basis, and periodicity
• C. Historical cost, matching principle, and conservatism
• D. Materiality, consistency, and objectivity

Answer: (A)

Verified step by step guidance

1. Understand the context of the question: The problem is asking which set of characteristics best identifies a business opportunity. This requires analyzing the options provided and determining which characteristics align with identifying and evaluating business opportunities.
2. Analyze the first option: 'Market demand, profitability, and feasibility.' These characteristics are directly related to assessing a business opportunity. Market demand indicates the need for a product or service, profitability assesses the potential financial gain, and feasibility evaluates whether the opportunity is practical and achievable.
3. Evaluate the second option: 'Double-entry system, accrual basis, and periodicity.' These are accounting principles and methods used for recording and reporting financial transactions. While important for financial accounting, they do not directly help identify a business opportunity.
4. Examine the third option: 'Historical cost, matching principle, and conservatism.' These are accounting concepts used for valuing assets, matching expenses to revenues, and ensuring cautious financial reporting. They are not directly related to identifying business opportunities.
5. Review the fourth option: 'Materiality, consistency, and objectivity.' These are principles of accounting that ensure accurate and reliable financial reporting. While they are important for financial decision-making, they do not specifically help identify a business opportunity.