Which of the Following Statements Is True About the Comparability

question 31

Multiple Choice

Which of the following statements is true about the comparability of financial statement of the United States and the United Kingdom?

• A) The result of Latin American colonialism is the large number of countries with the United Kingdom's influence on their accounting practices.
• B) The financial statements of companies in the United States and the United Kingdom are comparable as they are prepared after adjusting inflation, which is a critical factor affecting accounting practice.
• C) The basic principle followed by both countries in preparing financial statements is government economics and government tax and legal framework.
• D) The accounting practices of both the countries are oriented toward the decision needs of a large number of investors and creditors.

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Definitions:

Diminishing Marginal Utility

A principle stating that as more of a good or service is consumed, the additional satisfaction from consuming one more unit decreases.

Income Effect

The impact of income changes on the demand for goods or services by an individual or within the economy.

Substitution Effect

Describes how consumers react to a change in the price of a good by substituting it with another good that is relatively cheaper.

Income Effect

The income effect refers to the change in an individual's or economy's income and how that change will impact the quantity demanded of a good or service.