Under New Accounting Standards Passed in 2006 Firms Must Report

question 52

Multiple Choice

Under new accounting standards passed in 2006 firms must report changes in accounting principle in the current and prior years as if the new accounting principle had been applied all along.The rationale for this change was:

• A) using the same accounting principle in current and prior periods enhances the information content of reported earnings in forecasting future earnings.
• B) conservatism.
• C) comparability.
• D) materiality.

---

Definitions:

Pay Gap

The difference in average earnings between any two groups within the workforce, often used to discuss the disparity between genders or ethnic backgrounds.

Nonmonetary Reward

A form of compensation or incentive that does not involve the direct payment of money, such as appreciation, recognition, or professional development opportunities.

Compensating Differential

Additional income or benefits offered to employees to offset unpleasant aspects of a job.

Compensating Differential

Additional wage or payment provided to workers to compensate for undesirable aspects of a job, such as risk or unpleasant conditions.