One Problem That the FASB Has Noted with Overly Conservative

question 54

Multiple Choice

One problem that the FASB has noted with overly conservative accounting is that:

• A) Under-reporting of income in one period often leads to over-reporting income in future periods.
• B) Bankers and creditors tend to be unhappy with conservative balance sheets.
• C) This accounting generally forces companies to pay unduly high taxes.
• D) This accounting tends to make income too volatile.

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Definitions:

Capillary Refill

A test to assess peripheral circulation and dehydration by measuring how long it takes for color to return to an extremity's capillary bed after pressure is applied.

Chronic Obstructive Pulmonary Disease

A group of lung conditions that block airflow and make it difficult to breathe, including emphysema and chronic bronchitis.

Acute Exacerbation

A sudden worsening of the symptoms of a chronic condition, leading to an increased severity of disease state in a short period of time.

Near Vision

The ability to see objects clearly at a close distance, typically within arm's reach.