Which of the Following Should Be Considered When Examining a Software

question 23

Multiple Choice

Which of the following should be considered when examining a software development company's earnings persistence?

I. Changes in accounting estimates
II. Amount spent on software development
III. Gains from sale of marketable securities
IV. Managerial compensation

• A)I, II, III, and IV
• B)I, II, and III
• C)I, II, and IV
• D)I, III, and IV

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Definitions:

Depletion

The systematic allocation of the cost of natural resources over their productive lives is known as depletion, reflecting the reduction in the availability of resources as they are extracted or utilized.

Natural Resource

Materials or substances such as minerals, forests, water, and fertile land that occur in nature and can be used for economic gain.

Straight-Line Method

A depreciation technique that allocates an equal amount of an asset's cost to each year of its useful life.

Commercial Substance

A term used in accounting to indicate that a transaction has caused a change in the economic circumstances of a business.