Which of the Following Statements Is True Concerning Accounting Choices

question 32

Multiple Choice

Which of the following statements is true concerning accounting choices?

• A)Management always gets to select the alternative that best meets their objective.
• B)Management always uses objectives to solve their accounting choice problems.
• C)To be an acceptable recommendation based on facts, the alternative must also have been acceptable in meeting objectives and constraints.
• D)To be an acceptable recommendation based on objectives, the alternative must also have been acceptable given the constraints and facts.

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Definitions:

Pretax Income

The income that a company earns before tax expenses are deducted, often referred to as earnings before tax (EBT).

Understatement

The act of presenting financial figures that are lower than the actual numbers, either intentionally or unintentionally.

LIFO Reserve

The difference in inventory valuation between the Last In, First Out (LIFO) method and another inventory accounting method, such as FIFO (First In, First Out).

FIFO Amounts

The value of inventory computed under the First-In, First-Out method, assuming the items purchased or manufactured first are sold first.