A Commitment Device Is

question 98

Multiple Choice

A commitment device is:

• A) an arrangement entered into by an individual with the aim of helping fulfill a plan for future behavior that would otherwise be difficult.
• B) a way to deal with time inconsistency.
• C) something that helps people conquer their vices.
• D) All of these are true.

---

Definitions:

Elimination

In accounting, the process of removing intercompany transactions and balances from the financial statements of a group of companies consolidated as one entity.

Intercompany Profits

Profits that arise from transactions between companies within the same group, which are not realized from the perspective of the consolidated entity.

Consolidation Method

An accounting method used when a parent company includes the financials of its subsidiary into its own financial statements.

Unrealized Profits

Profits that have been earned on paper through an investment's increased value but have not yet been realized through a sale.