Under the Debt Hypothesis for Accounting Policy Choice

question 16

Multiple Choice

Under the debt hypothesis for accounting policy choice:

• A) managers act in their own interests and therefore prefer more remuneration.
• B) managers of entities with bonus plans prefer accounting policies that increase profit in the long-term.
• C) managers have no discretion in choosing accounting policies relating to debt.
• D) managers of entities with high leverage are likely to choose accounting policies that increase profit and equity.

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Definitions:

Least Expensive

The option available that has the lowest cost associated with it.

Integration Capability

The ability of different technology systems and software applications to work together, sharing data and functionality for enhanced efficiency.

Hardware Decisions

Choices and considerations made regarding the physical components of a computer system or network, affecting performance and capabilities.

Speed

In the context of computing and technology, speed often refers to the rate at which data is processed or transferred, or how fast a hardware component or system can perform its designated tasks.