Which of the Following Statements Is ?Consistent with the Positive

question 49

Multiple Choice

Which of the following statements is ?consistent with the positive accounting theory paradigm?

• A) Managers avoid future sacrifice of economic benefits debt covenants when the company is close to violation of debt covenants.
• B) Managers avoid constructive obligations in the presence of accounting based debt covenants even though there is no realistic alternative to making future sacrifice of economic benefits.
• C) Managers choose accounting methods that will decrease income to reduce the probability of debt covenant violation.
• D) Managers avoid income increasing accounting methods to reduce the probability of debt covenant violation.
• E) All of the given answers

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Definitions:

R

In electrical engineering, symbolically represents resistance, the property of a material that opposes the flow of electric current, measured in ohms (Ω).

Z

Often represents impedance in electrical circuits, a measure of opposition to AC including both resistance and reactance.

RC Parallel Circuit

A circuit configuration consisting of a resistor (R) and a capacitor (C) connected in parallel with each other across a power supply.

R

Commonly used to symbolize resistance in electrical equations and diagrams, measured in ohms (Ω).