Which of the Following Statements Is Correct with Respect to Positive

question 43

Multiple Choice

Which of the following statements is correct with respect to positive accounting theory?

• A) Managers of firms with bonus-based contracts prefer LIFO method of valuation basis, if permitted.
• B) Managers of firms with bonus-based contracts prefer FIFO method of valuation basis.
• C) Managers prefer the FIFO method of valuation basis.
• D) Managers with debt covenants prefer LIFO method, if permitted.

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Definitions:

Manipulation

The act of controlling or influencing someone or something to achieve a desired outcome, often without the awareness of the person being influenced.

Adolescence

The period of life transitioning from childhood to adulthood, typically involving significant physical, psychological, and social changes.

Puberty

The period of sexual maturation during which a person becomes capable of reproduction.

Adulthood

The period in the human lifespan when an individual is considered fully developed and mature, both physically and psychologically.