Which of the Following Is a True Statement

question 51

Multiple Choice

Which of the following is a true statement?

• A)When arbitrary allocations are used, income statements have very little information content.
• B)The calculation aspects of most expense measurements are easily resolved under historical cost accounting.
• C)When arbitrary allocations are used, income statements still have information content.
• D)Capital market research has shown that the usefulness of accounting numbers is best resolved using the deductive logic of the allocation problem.

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Definitions:

Marginal Cost

The increase in total cost that arises from producing an extra unit of output.

Fixed Cost

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance.

Cartel

An agreement among competing firms to control prices or exclude entry of a new competitor in a market, often to maximize their profits illegally or unethically.

Collusive Agreements

Arrangements or agreements, often illegal, between competing firms to limit competition, control prices, or divide markets among themselves.