If a Company Adopts a New Accounting Principle, It Must

question 44

Multiple Choice

If a company adopts a new accounting principle, it must justify the change on the grounds that the new principle

• A) increases the relevance of the financial statements.
• B) increases the reliability of the financial statements.
• C) is preferable to the old principle.
• D) increases the transparency of the financial statements.

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Definitions:

Reactive

Refers to responding to stimuli after they have occurred, rather than anticipating or initiating action.

Evocative

Having the ability to elicit a strong mental, emotional, or physical response.

Person-Environment Interaction

This term describes the dynamic and reciprocal relationship between individuals and their surroundings, where both influence and are influenced by each other.

Role Continuity Principle

A psychological principle suggesting that individuals are more likely to maintain a consistent self-concept and psychological well-being when they can maintain consistent social roles over time.