A Limitation of Using Past Performance as a Basis for Judging

question 175

Multiple Choice

A limitation of using past performance as a basis for judging actual results is that ________.

• A) future conditions can be different from the past
• B) any undervaluation of profits in the past period is likely to continue
• C) any subsequent change in accounting treatment will distort performance evaluation
• D) they tend to distort results when current and past conditions are similar

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Definitions:

Being Built

The process of constructing or developing something over time.

Adversarial Relationship

A relationship characterized by conflict, opposition, or incompatibility between parties.

Identification-Based Trust

Trust that arises when individuals identify with each other’s desires and intentions, thereby understanding and predicting each other’s behavior.

Shared Values

Shared values are fundamental beliefs or principles that are held in common by members of a group, community, or organization, serving as a basis for unity and cooperation.