Which of the Following Is True Regarding the Predictive Ability

question 49

Multiple Choice

Which of the following is true regarding the predictive ability of accounting data?

• A)The predictive ability objective is validated by market efficiency.
• B)Previous studies have indicated that historical cost income is not as good a predictor of itself as general price-level-adjusted income or current value income.
• C)Studies have found that income measurement methods that have the greatest predictive ability are also best in terms of most other objectives.
• D)Predictive ability is the same as the quantifiability standard of ASOBAT.

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Definitions:

Highly Variable

Describes processes or systems subject to high levels of change or fluctuation, often challenging to predict or manage.

Pull Processes

A production strategy where products are only made in response to demand, minimizing inventory levels and reducing waste.

Customer Demand

The desire and willingness of consumers to purchase goods or services at a given price.

Available Capacity

The maximum amount of work or output that a system can produce or handle in a given period without additional resources.