Why Is Accounting Conservatism NOT a Basic Principle Underlying Accounting

question 72

Multiple Choice

Why is accounting conservatism NOT a basic principle underlying accounting standards in the People's Republic of China?

• A)It is perceived to manipulate accounting numbers for the benefit of owners by exploiting workers.
• B)It too closely reflects the views of the masses, which are not considered in establishing accounting standards.
• C)Conservatism has been shown to cause economic hardship for companies operating in China.
• D)Conservatism overstates assets, which is perceived to distort financial results.

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Definitions:

Simultaneously

Occurring at the same time or concurrently.

Credible Threat

A declaration of intended action or punishment that is believable and realistic enough to influence the behavior of others.

Equilibrium

A state in which all forces or influences are balanced, such as in a market when supply equals demand.

Dominant Strategy

In game theory, an approach that remains optimal for a participant, no matter what tactics are adopted by the others.