According to Positive Accounting Theory,the Existence of Debt Covenants

question 27

Multiple Choice

According to Positive Accounting Theory,the existence of debt covenants:

• A) Can be explained from an efficiency perspective, and gives management an incentive to manipulate accounting information from an opportunistic perspective
• B) Can be explained from an opportunistic perspective, and gives management an incentive to manipulate accounting information from an efficiency perspective
• C) Can be explained from both efficiency and opportunistic perspectives
• D) Cannot be explained

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Definitions:

Sustainable Development

Sustainable development is the practice of meeting the needs of the present without compromising the ability of future generations to meet their own needs, emphasizing environmental stewardship, economic growth, and social equity.

Resource Use

Refers to the way in which resources (such as time, money, and materials) are utilized or managed.

Future Generations

The people who will live at a later time, especially the descendants of the current population.

Moral Development

The growth process in individuals whereby they progressively adopt more mature ethical principles and social attitudes, understanding right from wrong in increasingly sophisticated ways.