Which of the Following Is Not a Reason Preparers of Financial

question 6

Multiple Choice

Which of the following is not a reason preparers of financial statements need to make choices about which accounting policies to use?

• A) Some aspects of financial reporting practice are not covered by specific accounting standards
• B) Some standards have alternative policies with no clear indication of the proper criteria to be used
• C) Judgements are to be made for certain issues, such as useful life, depreciation, and allowance for doubtful debts
• D) The IASB is attempting to converge accounting policies with other worldwide accounting standards setters

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Definitions:

Market Efficiency

A concept that describes the degree to which stock prices and other securities prices reflect all available, relevant information.

Market Value

The ongoing cost in the market for an asset or service to be sold or bought.

Investment Cost

The total expenses incurred in purchasing an asset, including the price of the asset plus any additional fees or charges.

Return on Investment

A measure of the profitability of an investment, calculated as the net profit from the investment divided by the initial cost of the investment.