What Term Is Used to Describe Accounting Standards That Encourage

question 42

Multiple Choice

What term is used to describe accounting standards that encourage risk-taking in financial reporting?

• A) Optimism
• B) Conservatism
• C) Professionalism
• D) Transparency

---

Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present value, often reflecting the investor's required rate of return.

Major Repairs

Significant restorations or overhauls to equipment, buildings, or machinery that extend their useful life but are not considered routine maintenance.

Simple Rate Of Return

A metric used to evaluate the gain or loss on an investment relative to the amount invested, expressed as a percentage.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity level to meet short-term obligations and operations.