As William Is Preparing the End of Year Financial Statements

question 35

Multiple Choice

As William is preparing the end of year financial statements, he notices that the numbers required for his personal bonus have not been met. He begins to review the estimates that he has made in order to possibly adjust some numbers to meet the requirements for his bonus. This is an example of

• A) Window dressing
• B) Meeting internal targets
• C) Income smoothing
• D) Meeting external expectations

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Definitions:

Allocative Efficiency

A state of resource allocation where goods and services are distributed according to consumer preferences in a way that maximizes utility.

External Benefits

Advantages that result from a product or service's use that affect someone other than the direct consumer or producer, often justifying government intervention.

Consumption

The process by which goods and services are used by households and individuals, leading to a decrease in their availability.

Negative Externalities

Negative effects or costs that are incurred by third parties as a result of economic activities, for which they are not compensated, such as pollution.