IFRS Allows Managers Considerable Discretion When Determining the Point at Which

question 91

Multiple Choice

IFRS allows managers considerable discretion when determining the point at which revenue should be recognized.This type of flexibility is appropriate primarily because:

• A)managers do not like rules.
• B)different countries have different standards for economic activities and they do not want to change them.
• C)managers need to consider their own self-interests when choosing accounting policies.
• D)economic activities are too complex for precisely defining accounting rules that suit every situation.

Recognize the role and importance of a self-imposed budget in controlling and evaluating managerial performance.

Calculate direct materials needed for a production period, including adjustments for inventory levels.

Identify the sequence and relationship between various components of a master budget, including the role of the cash budget.

Understand the process and timing of sales forecasts in budget preparation.

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Definitions:

Artificially Scarce Good

A product or service whose availability is restricted through patents, copyrights, or other legal means, rather than by the limits of physical scarcity.

Pigouvian Tax

A tax imposed on activities that generate negative externalities, intended to correct an inefficient market outcome by internalizing the external costs.

Efficient Level

A point at which resources are allocated in the most effective manner, maximizing output without wasting resources.

Excludable

A characteristic of a good or service that allows its owner to prevent others from using it without permission.