Which of the Following Statements Applies to Normative Theory

question 115

Multiple Choice

Which of the following statements applies to normative theory?

• A) It focuses on what actually is.
• B) It seeks what is rational or optimal according to some criteria.
• C) It focuses on what ought to be.
• D) Both A and B
• E) Both B and C

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Definitions:

Management Approach

A strategic method in accounting and reporting where the organization’s internal management framework influences the structure and content of its financial and sustainability reports.

Mandatory Disclosure

The requirement for organizations to publicly reveal certain information, governed by regulatory bodies to ensure transparency and accountability in operations.

Accounting Standard

Official guidelines for financial reporting and accounting practices that companies must follow.

Segment Reporting

The practice of disclosing financial information from different areas or segments of a business, often required for public companies to provide transparency to investors.