Principles-Based GAAP Is Sometimes Criticized for Being

question 73

Multiple Choice

Principles-based GAAP is sometimes criticized for being

• A) too inflexible.
• B) too flexible.
• C) too inconsistent.
• D) too difficult for the reader to understand.

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Definitions:

Operating Costs

Expenses associated with the normal business operations, including cost of goods sold and operational overhead.

Operating Cost

Expenses associated with the day-to-day functions of a business, including costs for rent, utilities, and payroll.

Useful Life

The estimated period over which an asset is expected to be usable for its intended purpose, affecting depreciation calculations.

Economic Value

A measure of the benefit provided by a good or service to an economic agent, often quantified in terms of willingness to pay or the added utility it offers.