Which of the Following Statements Is a Valid Criticism of the Accounting

question 39

Multiple Choice

Which of the following statements is a valid criticism of the accounting profession with respect to its consideration of social and environmental reporting?

• A) Practice of discounting liabilities, particularly those liabilities that will not be settled for many years, allows the recognition of future expenditures on environmental clean-up in the current period.
• B) Gray, Owen and Adams (1996) argue that discounting makes good economic sense but discourages entities in undertaking environmentally friendly activities.
• C) The profession has a narrow focus of users of social and environmental reports limiting this to investors, governments and institutional investors.
• D) AASB 137 "Provisions, Contingent Liabilities and Contingent Assets" limits the obligations relating to environmental performance to legal obligations.
• E) None of the given answers

---

Definitions:

Discounting

A financial technique that calculates the present value of future cash flows by applying a discount rate.

Net Present Value

A financial metric that calculates the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Cash Flows

Cash flows represent the movement of money into and out of a business, indicating its liquidity and financial health.

Early Years

Early years typically refers to the period in human development from birth to the start of formal education, emphasizing the importance of nurturing and education in a child's early life.