Arguments Against the Regulation of Accounting Information Include

question 48

Multiple Choice

Arguments against the regulation of accounting information include:

• A) Mandated disclosures are cheap to provide and by their nature will devalue the worth of the information being provided.
• B) That by making so many choices of accounting methods available under the standards, the efficiency with which the information is provided will be enhanced.
• C) Companies will be motivated to disclose good news but not disclose bad news if they are not forced to make certain mandated disclosures (the "lemons" argument).
• D) Managers of the organisation are in the best place to determine what information should be produced to increase the confidence of external stakeholders.
• E) None of the given answers.

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Definitions:

Inflation Rate

How quickly the average cost of products and services goes up, causing the ability to purchase to decline.

Price/Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, indicating the dollar amount an investor can expect to invest in a company in order to receive one dollar of that company’s earnings.

Interest Rates

The proportion of a loan charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power over time.