Because IFRS Allows Managers Flexibility in Determining Accounting Choices, the Biggest

question 18

Multiple Choice

Because IFRS allows managers flexibility in determining accounting choices, the biggest challenge for accountants and other financial professionals is:

• A)Persuade managers to make the most conservative accounting choices.
• B)Knowing when to allow managers to choose aggressive accounting policies.
• C)Ensuring that managers make choices with the interests of the stakeholders in mind.
• D)Ensuring that managers make choices with their own self interests in mind.

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Definitions:

Actively Managing

The process of oversight and decision-making in investment strategies that involve frequent trading and allocation adjustments to achieve specific investment objectives.

Limits To Arbitrage

The constraints that prevent traders from executing trades that would bring prices into equilibrium, including transaction costs, funding costs, and risk considerations.

Availability Bias

A cognitive bias that causes people to overestimate the probability of events associated with memorable or vivid occurrences.

Clustering Illusion

The cognitive bias of seeing a pattern in random events where none actually exists.