Which of the Following Statements Is True About Accounting Measurements

question 16

Multiple Choice

Which of the following statements is true about accounting measurements such as profits and assets?

• A) They are subject to professional judgment.
• B) They would not vary if prepared by different accountants, providing they were based on the same set of accounting standards.
• C) They are based on hard, objective, evidence.
• D) All of the given options are correct.

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Definitions:

Risk Averse

A description of an individual or entity that prefers to avoid risk and would choose a certain outcome over a gamble with a potentially higher, but uncertain, return.

Portfolio

A group of investment vehicles comprising stocks, bonds, commodities, as well as cash and its equivalents, together with mutual funds and ETFs.

Adverse Selection

Adverse selection refers to a situation where sellers have information that buyers do not, or vice versa, about some aspect of product quality.

Utility Function

A mathematical representation of how consumers rank different bundles of goods according to their level of satisfaction or utility.