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:

ROI Calculation

A financial metric used to evaluate the efficiency and profitability of an investment, calculated as the return on investment divided by the cost of the investment.

Financial Benefits

Economic advantages or gains, such as increased income, cost savings, or improved financial performance.

Utility Analyses

Evaluations intended to measure the effectiveness and economic impact of human resource interventions like training and selection.

Financial Value

The monetary worth or significance of an asset, investment, or transaction.