Contingency Theory Proposes That

question 16

Multiple Choice

Contingency theory proposes that:

• A)Shareholder needs drive accounting system choices.
• B)Accounting policies are likely to be consistent within industries.
• C)Size is not an important factor when considering management accounting systems.
• D)No universally consistent accounting system can apply to all organisations.

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Definitions:

Soft Capital Rationing

Internal constraints imposed by a company's management on the funds allocated for new investments, often due to budgetary constraints.

Financial Markets

Financial markets are platforms where individuals and entities can trade financial securities, commodities, and other fungible items of value at low transaction costs and at prices reflective of supply and demand.

NPV Projects

Projects that are evaluated based on the Net Present Value method, helping in deciding whether they contribute positively to the company's value.

Soft Rationing

Refers to the internal limitations set by a company on the funds allocated for capital projects, despite having a strong financial position.