The Objectivity Concept Requires That

question 74

Multiple Choice

The objectivity concept requires that

• A) business transactions must be consistent with the objectives of the entity
• B) the Financial Accounting Standards Board must be fair and unbiased in its deliberations over new accounting standards
• C) accounting principles must meet the objectives of the Security and Exchange Commission
• D) amounts recorded in the financial statements must be based on independently verifiable evidence

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Definitions:

States Of Nature

Alternative conditions or scenarios in decision-making, reflecting different possible outcomes that are generally outside the control of the decision maker, with their uncertainties critical in risk analysis and management.

Expected Opportunity Loss

The anticipated loss in value resulting from not choosing the best action or decision under uncertainty.

Perfect Information

A theoretical concept where all participants have access to all relevant information, making fully informed decisions possible.

Preposterior Analysis

An evaluation method used in decision theory to assess the value of collecting additional information before making a decision.