Which of the Following Best Describes Why the Predicted Incremental

question 67

Multiple Choice

Which of the following best describes why the predicted incremental earnings arising from a given decision are not sufficient in and of themselves to determine whether that decision is worthwhile?

• A) These earnings are not actual cash flows.
• B) They are not easily predicted from historical financial statements of a firm and its competitors.
• C) They do not show how the firm's earnings are expected to change as the result of a particular decision.
• D) They do not tell how the decision affects the firm's reported profits from an accounting perspective.

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Definitions:

Conditioned Response

A learned reaction to a specific stimulus that occurs after repeated exposure to that stimulus.

Neutral Stimulus

A stimulus that initially produces no specific response other than focusing attention; in conditioning, it becomes associated with an unconditioned stimulus.

Unconditioned Stimulus

In classical conditioning, a stimulus that naturally and automatically triggers a response without prior conditioning.

Internal Attributions

The tendency to explain one's own behavior and the behavior of others based on internal, character-based factors.