Which of the Following Is True

question 31

Multiple Choice

Which of the following is true?

• A) Cash flow data is superior to earnings under the accrual basis in predicting long-term performance of an entity.
• B) Earnings under the accrual basis is superior to cash flow data in predicting short-term performance of an entity.
• C) Earnings under the accrual basis is superior to cash flow data in predicting long-term performance of an entity.
• D) Cash flow data is superior to earnings under the accrual basis in predicting both short- and long-term performance of an entity.

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Definitions:

Percentage Increase

A measurement that calculates the degree to which a value has risen compared to its previous value, expressed as a percentage.

Price Elasticity

Measures how much the quantity demanded of a good changes in response to a change in its price.

Coefficient

A numerical or constant quantity placed before and multiplying the variable in an algebraic expression.

Inelastic

Describing a situation where the demand for a good or service is relatively unaffected by changes in its price.