Why Inflation Accounting Is NOT Required in the United States

question 19

Multiple Choice

Why inflation accounting is NOT required in the United States and the United Kingdom since late 1980s?

• A)Accounting regulators in the U.S.and U.K.have not addressed the issue of inflation accounting in their pronouncements.
• B)Inflation is insignificant in the U.S.and the U.K.since late 1980's.
• C)Accounting regulators could not agree on a method for adjusting financial statements for the effect of inflation.
• D)Corporations in the U.S and U.K.voluntarily report inflation-adjusted financial statements, making the regulations unnecessary.

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Definitions:

Law of Small Numbers

A cognitive bias that leads people to infer or generalize outcomes from a small sample size, mistakenly treating it as representative of a larger population.

Double-Standard Thinking

The application of different sets of principles for similar situations, often leading to unfair or biased judgments.

Prototype

An early sample, model, or release of a product or concept used to test a process or act as a thing to be replicated or learned from.

Ingroup Differentiation Bias

A bias where individuals perceive greater variation and uniqueness among members of their own group (ingroup) compared to those in an outgroup.