There Is a Concern That Research and Development May Be

question 6

Multiple Choice

There is a concern that research and development may be reduced as a result of the new requirements in AASB 138 because:

• A) Companies will not have the cash available to pay for the research expenses up-front.
• B) Recognising expenses early will allow for larger profits later, which will help smaller firms.
• C) The 'horizon problem' suggests managers will not invest in long-term projects that do not immediately increase profits.
• D) Shareholders are only interested in short-term profits and will not be impressed by strategies that attempt to increase the long-term value of their shares.
• E) None of the given answers.

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Definitions:

Chromatin

The complex of DNA and proteins, mainly histones, that forms chromosomes within the nucleus of eukaryotic cells.

Visible Chromosomes

Chromosomes that are condensed and made visible under a microscope during cell division.

Sister Chromatids

Identical copies of a chromosome, connected by a centromere, formed during DNA replication and present until they are separated into two daughter cells during cell division.

Cohesin Proteins

Proteins that hold sister chromatids together, ensuring they are correctly segregated during cell division.