Intracompany Comparability Would Be Violated If

question 49

Multiple Choice

Intracompany comparability would be violated if

• A)a company used LIFO as its inventory cost method while other companies in the same industry used FIFO
• B)a company changed its bad debts expense estimate from one percent to two percent
• C)a bank did not classify its assets as current assets and noncurrent assets
• D)a company expenses all expenditures of less than $500 even if the expenditures result in probable future economic benefit

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Definitions:

Market System Failure

An economic situation where the allocation of goods and services by a free market is not efficient, often justifying government intervention.

Unfunded Liability

A future government spending commitment (liability) for which the government has not legislated an offsetting revenue source.

Social Security

The social insurance program in the United States financed by federal payroll taxes on employers and employees and designed to replace a portion of the earnings lost when workers become disabled, retire, or die.

Monetary Policy

A central bank’s changing of the money supply to influence interest rates and assist the economy in achieving price-level stability, full employment, and economic growth.