Which of the Following Statements Does Not Correctly Describe an Issue

question 87

Multiple Choice

Which of the following statements does not correctly describe an issue pertaining to the comparability of the cash flow statement across firms?

• A)The proportion of leases treated as operating leases versus capital leases varies substantially across firms.
• B)GAAP requires computer software development companies to expense all software development costs until the software reaches technological feasibility.However,GAAP does not have any criteria for determining technological feasibility which therefore allows companies flexibility with respect to this determination.
• C)Companies selling their accounts receivable at year-end are distorting their cash flows in the current year relative to their competitors that do not sell their receivables at year-end.
• D)Companies that aggressively manage their working capital can't easily manage the short-run appearance of their operating cash flows relative to those companies that do not aggressively manage their working capital.

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Definitions:

Cognitive Dissonance Reduction

The process of resolving the discomfort caused by holding two or more conflicting cognitions (beliefs, attitudes) by changing, adding, or minimizing one of the discordant factors.

Defective

A term used to describe something that is imperfect or lacking in some component, making it not fully functional.

Staples

Metal wire or plastic pieces used to bind materials together, typically papers or the edges of wounds in medical suturing.

Central Route

A method of persuasion that involves careful and thoughtful consideration of the arguments presented, leading to lasting attitude change.