Which of the Following Is Not True About Positive Accounting

question 4

Multiple Choice

Which of the following is not true about Positive Accounting Theory?

• A) A positive theory seeks to explain and predict particular phenomena.
• B) A positive theory focuses on the relationships between various individuals and how accounting is used to assist in the functioning of these relationships.
• C) A positive theory prescribes how a particular practice should be undertaken.
• D) All of the given options are correct.

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Definitions:

Security Prices

The market value for tradable financial instruments such as stocks, bonds, and derivatives at any given time.

Efficient-Market Hypothesis

The theory that all available information is already reflected in securities prices, therefore making it impossible to consistently achieve higher returns than the overall market.

Security Prices

The market price at which a financial security is traded.

Risk Level

The degree of uncertainty associated with the potential for loss or undesirable outcomes in an activity or decision.