If Persons of Greater Ability Also Tend to Invest More

question 29

Multiple Choice

If persons of greater ability also tend to invest more in human capital,then the impact of human capital on earnings will be:

• A)understated
• B)overstated
• C)unaffected
• D)a direct impact

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Definitions:

GAAP

Set of accounting standards and principles designed to ensure consistency, fairness, and transparency in financial reporting.

IFRS

International Financial Reporting Standards, a set of accounting principles for reporting financial information used globally.

Time Period Assumption

An accounting principle that states a business operation can be divided into discrete time periods, such as months, quarters, or years for reporting purposes.

GAAP

Generally Accepted Accounting Principles, which are a set of rules and guidelines that companies must follow when preparing their financial statements in the U.S.