Which of the Following Statements Regarding the Information Disclosed in Financial

question 107

Multiple Choice

Which of the following statements regarding the information disclosed in financial statements is incorrect?

• A) The costs of providing all possible information about a firm would be prohibitively high for the business.
• B) Some information disclosed in financial statements may be irrelevant to some users.
• C) Financial statements should be detailed enough to answer any financial-related question an investor might have.
• D) When too much information is presented, users may suffer from information overload.

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Definitions:

Signal Detection Theory

A psychological theory that describes how individuals decide on the presence or absence of a stimulus under conditions of uncertainty.

Ganglion Cells

Neurons located in the retina of the eye that integrate visual information before it's transmitted to the brain via the optic nerve.

Cones

Sensory receptors in the retina that detect light waves and transduce them into signals that are processed in the brain as vision. Cones respond best to higher levels of illumination, and therefore they are responsible for seeing color and fine detail.

Rods

Sensory receptors in the retina that detect light waves and transduce them into signals that are processed in the brain as vision. Rods respond best to low levels of illumination, and therefore they do not support color vision or seeing fine detail.