Traditional Financial Accounting Calculations of Profit Ignore the Cost of Externalities.One

question 22

Multiple Choice

Traditional financial accounting calculations of profit ignore the cost of externalities.One reason for this is:

• A) Negative impacts on environmental resources not controlled by an entity (e.g. air and oceans) are not considered impacts on assets of the entity.
• B) Negative impacts on environmental resources not controlled by an entity do not fall into the definition of extraordinary items.
• C) Negative impacts on environmental resources not controlled by an entity may cover more than one future accounting period.
• D) Negative impacts on environmental resources not controlled by an entity are by-products of ordinary activities and are not therefore disclosed in the income statement.
• E) None of the given answers.

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