According to Positive Accounting Theory,the Size of the Entity May

question 48

Multiple Choice

According to Positive Accounting Theory,the size of the entity may have an impact on management's decision to revalue because of management's motivation to reduce political costs.There is more than one possible view regarding the effect of revaluation on political visibility,including which of the following?

• A) Since revaluations may increase the variability of asset size, they will increase political costs.
• B) Where increases in asset size are expected to result from revaluations, the increase in the size of the entity may reduce political costs.
• C) Where revaluations increase the size of the asset base, the return on assets will be lower and this will potentially lower political costs.
• D) Where revaluations result in an increase in the asset base, depreciation expense will increase and lead to greater political costs.

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Definitions:

Glaucoma

A group of eye conditions that damage the optic nerve, often caused by abnormally high pressure in the eye, leading to loss of vision if not treated.

Macular Degeneration

A medical condition which results in blurred or no vision in the center of the visual field due to damage to the macula, often related to aging.

Exaggerated Emphasis

Placing undue stress or importance on something, often beyond what is considered reasonable or proportionate.

Dopamine

Dopamine is a neurotransmitter involved in many body functions, including movement, motivation, reward, and the sensation of pleasure, playing a significant role in the brain's reward and pleasure centers.