Financial Statements Under the IFRS Framework Do Not Help Users

question 37

Multiple Choice

Financial statements under the IFRS Framework do not help users with what kind of objective(s) ?

• A)Alleviating moral hazard.
• B)Forecasting future product growth.
• C)Prediction of future earnings.
• D)Evaluating the riskiness of an investment.

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Definitions:

Present Consumption

The act of using goods and services to satisfy current needs and desires rather than saving for future use.

Self-Control Problems

Refers to the difficulty people have in sticking with earlier plans and avoiding suboptimal decisions when finally confronted with a particular decision-making situation. A manifestation of time inconsistency and potentially avoidable by using precommitments.

Time Inconsistency

The human tendency to systematically misjudge at the present time what will actually end up being desired at a future time.

Behavioral Economists

Economists who study the psychological, cognitive, emotional, cultural, and social factors on the economic decisions of individuals and institutions.