One of the Major Advantages of Making Adjustments in Order

question 90

Multiple Choice

One of the major advantages of making adjustments in order to improve the quality of financial statements is that they:

• A) ensure that revenues and expenses are recognized during the period they are earned and incurred.
• B) ensure that all estimates of future activities are eliminated from consideration.
• C) ensure that revenues and expenses are recognized conservatively during the period they are paid.
• D) provide an opportunity to manipulate the numbers to the best effect.

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Definitions:

Consistent Over Time

A principle stating that certain attributes, behaviors, or patterns remain stable across different periods in an individual's life.

Social Roles

The parts individuals play as members of a social group, which meet the expectations, behaviors, and actions that society ascribes to them.

Cumulative Continuity Principle

The idea that personality becomes more stable and unchanging as a person gets older.

Rank-Order Consistency

The degree to which the relative ordering of individuals on a particular trait remains stable over time.