Arguments Against the Regulation of Accounting Information Include

question 17

Multiple Choice

Arguments against the regulation of accounting information include:

• A) Mandated disclosures are cheap to provide and by their nature will devalue the worth of the information being provided.
• B) By making so many choices of accounting methods available under the standards, the efficiency with which the information is provided will be enhanced.
• C) Companies will be motivated to disclose good news but not disclose bad news if they are not forced to make certain mandated disclosures (the 'lemons' argument).
• D) Managers of the organisation are in the best place to determine what information should be produced to increase the confidence of external stakeholders.

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Definitions:

Average Total Cost

This refers to the total cost of production divided by the number of units produced, inclusive of fixed and variable costs.

Marginal Cost

The cost incurred by producing one additional unit of a good or service.

Opportunity Cost

Opportunity cost represents the benefits an individual, investor, or business misses out on when choosing one alternative over another.

Marginal Product

Describes the additional output that is produced by using one more unit of a factor of production, holding all other factors constant.