Which of the Following Statements Is ­Consistent with the Positive

question 12

Multiple Choice

Which of the following statements is ­consistent with the positive accounting theory paradigm?

• A) Managers avoid future sacrifice of economic benefits debt covenants when the company is close to violation of debt covenants.
• B) Managers avoid constructive obligations in the presence of accounting based debt covenants even though there is no realistic alternative to making future sacrifice of economic benefits.
• C) Managers choose accounting methods that will decrease income to reduce the probability of debt covenant violation.
• D) Managers avoid income increasing accounting methods to reduce the probability of debt covenant violation.

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Definitions:

Special Project Group

A team assembled for a defined period to focus on a specific goal or project, often cross-functional in nature.

Social Loafing

The phenomenon where individuals exert less effort to achieve a goal when they work in a group than when they work alone.

Free Riders

Individuals who benefit from resources, goods, or services without paying for them or contributing to their cost.

Anti-Synergistic

Describes actions or processes that interfere with or negate each other's effectiveness, leading to a result less than the sum of individual parts.