Which of the Following Statements Is Correct with Respect to Set-Off

question 32

Multiple Choice

Which of the following statements is correct with respect to set-off of assets and liabilities?

• A) An entity will apply set-off to reduce the number of elements reported in the financial statements.
• B) An entity will apply set-off to avoid violation of debt covenants in debt contracts.
• C) Positive accounting theory predicts the likelihood that managers will apply set-off to increase profits.
• D) Positive accounting theory predicts the likelihood that managers will apply set-off to reduce political costs.
• E) None of the given answers.

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