The Problem with a 'Blanket Rule' Requiring All Expenditure of a Particular

question 52

Multiple Choice

The problem with a 'blanket rule' requiring all expenditure of a particular type to be written off as incurred (e.g.expenditure on research) ,is that:

• A) It is too much like US GAAP.
• B) It does not enable readers of financial reports to differentiate between entities that have generated future economic benefits from particular activities and those who have not.
• C) It does not enable readers of financial reports to differentiate between entities that have managed their earnings and those that have not.
• D) It does not enable readers of financial reports to differentiate between entities that are going to continue to be successful and those that are not.

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Definitions:

Issued Shares

The total number of shares that a corporation has legally sold to shareholders, including those held by the corporation itself as treasury shares.

Stockholders

Individuals or entities that own shares in a corporation, granting them rights to dividends and a stake in the corporate assets and earnings.

Shares

Units of ownership interest in a corporation or financial asset, representing a portion of the shareholder's stake in the company.

Board Of Directors

A group of elected individuals who oversee the activities and governance of a corporation, ensuring it operates in the best interests of its shareholders.