When Managers Know the Possible Outcomes of a Decision and Can

question 5

Multiple Choice

When managers know the possible outcomes of a decision and can assign probabilities to each of these outcomes in terms of their likelihood of occurrence in the future,this is known as:

• A)Uncertainty
• B)Certainty
• C)Risk
• D)Bounded rationality
• E)Dialectical inquiry

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Definitions:

Prior-period Information

Financial information related to a previous reporting period that is used for comparison or adjustment purposes in current financial statements.

Disclosure

The act of providing important information to shareholders and the public, which is typically mandated by law or regulations.

Accounting Policies

The specific principles, bases, conventions, rules, and practices applied by an entity in preparing and presenting financial statements.

Estimation Uncertainty

The degree of approximation involved in certain accounting estimates, which may affect the financial statements.