The SEC's 2003 Report to the Congress on "Principles-Based" Accounting

question 25

Multiple Choice

The SEC's 2003 report to the Congress on "principles-based" accounting observed that the first characteristic of objectives-based standards,as dictated by the Sarbanes-Oxley Act,is that any standard must be based on

• A) the cost-benefit test.
• B) an improved and consistently applied framework.
• C) qualitative characteristics.
• D) transparency.

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Definitions:

Level

A stage, degree, or magnitude in a hierarchical system, often used to describe intensity, development, or achievement.

Overextraction

The process of extracting natural resources faster than they can be replenished, leading to depletion or degradation of those resources.

User Cost

The cost of using a durable good or capital, considering factors like depreciation and the opportunity cost of not investing the funds elsewhere.

Extraction Cost

The expenses associated with removing natural resources from the earth or sea, including labor, equipment, and regulatory compliance costs.