The Predictions of PAT Formulated by Watts and Zimmerman (1990)are

question 31

Multiple Choice

The predictions of PAT formulated by Watts and Zimmerman (1990) are largely concentrated on the following predictions:

• A) Managers of companies with bonus plans are likely to choose income increasing accounting policies.
• B) Managers of companies that are close to violating accounting-based debt covenants are likely to choose income increasing accounting policies.
• C) Managers of companies that are subject to greater political costs are likely to choose income decreasing accounting policies.
• D) All of the given answers are correct.

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Definitions:

Decision

The process of choosing among different options or actions based on certain criteria or considerations to achieve a desired outcome.

Producing Component

A part or element in a manufacturing process that is being made into a final product.

Purchasing Externally

The process of acquiring goods, services, or works from an outside external source, often through a tendering or competitive bidding process.

Third-Party Logistics

External companies hired to manage all or part of another company’s logistics functions, including transportation, warehousing, and distribution.