Which of the Following Statements About Income Smoothing Is True

question 12

Multiple Choice

Which of the following statements about income smoothing is true?

• A)Incoming smoothing can only be accomplished through revenue recognition policies.
• B)Income smoothing can only be accomplished through the use of estimates.
• C)IFRS provides more opportunities for income smoothing than under pre-IFRS GAAP.
• D)Income smoothing through expense recognition policies is effective if there is a strong relationship between expenses and revenues.

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Definitions:

Multinational Organization

is a business entity that operates in multiple countries outside of its original or home country, managing production or delivering services in several countries.

Market Price

The current price at which an asset or service can be bought or sold in a particular market, determined by supply and demand dynamics.

Open Pay System

A compensation strategy where an organization openly shares salary ranges and sometimes individual salaries, aiming for transparency.

Pay Compression

Pay compression occurs when there is only a small difference in pay between employees regardless of their skills, experience, or job responsibilities, often resulting in dissatisfaction among more qualified or experienced employees.