The Use of Alternative Accounting Methods

question 116

Multiple Choice

The use of alternative accounting methods

• A) is not a problem in ratio analysis because the footnotes disclose the method used.
• B) may be a problem in ratio analysis even if disclosed.
• C) is not a problem in ratio analysis since eventually all methods will lead to the same end.
• D) is only a problem in ratio analysis with respect to inventory.

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Definitions:

Disability Insurance

A type of insurance policy providing income in the event a worker is unable to perform their job due to disability.

Contract

A legally binding agreement between two or more parties that is enforceable by law.

Mutual Consideration

The reciprocal exchange of value or promises within a contract, where each party agrees to give up something in return for receiving something else of value.

Subrogation

The process by which one party takes over the rights of another party, typically in the context of insurance claims.