The Statement That Does Not Relate to the Information Perspective

question 26

Multiple Choice

The statement that does not relate to the information perspective on accounting policy choice is:

• A)Manager use the accounts to signal expectations and intentions regarding the future
• B)The information perspective is aligned with contracting theory
• C)The accounting information produced under this perspective is used to indicate how the value of the firm and claims against it will change
• D)Managers of firms with neutral news have an incentive to report positive news so they will not be suspected of having poor results

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Definitions:

Initial Investment

The amount of money used to start a project, purchase an asset, or invest in a financial instrument.

Rate of Return

The capital gain or loss realized on an investment over an allocated period, defined as a percentage of the investment’s preliminary cost.

Per Month

A time frame reference indicating occurrences or measurements within a calendar month.

Effective Annual Rate

A financial metric that represents the equivalent annual interest rate taking compounding into account, thus providing a more accurate measure of interest earned or paid over a year.