A Company Has Chosen Accounting Policies That Result in Maximizing

question 31

Multiple Choice

A company has chosen accounting policies that result in maximizing its net income.Which of the following is not a reason for doing this?

• A)To comply with loan agreement maintenance tests
• B)For favourable performance evaluation
• C)For cash flow prediction
• D)To attract new investors

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Definitions:

Warranty Payments

Expenses incurred by a company to repair, replace, or compensate for defective goods during a warranty period.

Defined Benefits Plan

A type of employer-sponsored retirement plan where employee benefits are calculated using a formula that considers factors such as salary history and duration of employment.

Investment Risks

Various factors or events that can cause an investment to underperform or result in the loss of value.

Payroll Bank Account

A specific bank account designated for processing payroll and related transactions for a company's employees.