A Good Economic Theory

question 148

Multiple Choice

A good economic theory:

• A)approaches reality in all its complexity.
• B)involves so much distortion of reality that it is worthless.
• C)focuses on the unique aspects of each situation.
• D)involves some simplification of reality.
• E)bears no relation to reality.

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Definitions:

Gain Contingencies

Potential increases in assets or decreases in liabilities that may occur as a result of a future event, and which are acknowledged in financial statements if they are probable and can be reasonably estimated.

Footnote Disclosures

Explanatory notes added to the financial statements to provide more detailed information about certain figures.

Subsequent Events

Events occurring after the balance sheet date but before the financial statements are issued, which could materially affect the financial statements if not accounted for.

Fire or Flood Loss

Refers to the financial impact on a business or individual's assets due to damage caused by fire or floods, often covered by insurance.