There Is Significant Scope for Managers to Exercise Their Judgment

question 44

Short Answer

There is significant scope for managers to exercise their judgment in the selection of accounting policies.PAT suggests that accounting policy choices of managers may be influenced by the existence of debt contracts,compensation plans or political costs.How are users made aware of the accounting policies adopted by the reporting entity?

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Definitions:

Quantity Supplied

The complete sum of a good or service that manufacturers are able and eager to provide at a certain price throughout an established duration.

Quantity Demanded

The amount of a good or service that consumers are willing to buy at a given price at a specific time.

Equilibrium Price

The price point at which the quantity of goods supplied equals the quantity demanded, resulting in market balance.

Equilibrium Quantity

At the equilibrium price, the volume of goods or services both offered and sought.