Which of the Following Accounting Areas Involves Professional Judgment: (I)

question 5

Multiple Choice

Which of the following accounting areas involves professional judgment: (i) accounting information systems, (ii) budgeting, (iii) choosing between FIFO and LIFO.

• A) i and ii only.
• B) ii and iii only.
• C) i and iii only.
• D) i, ii and iii.

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Definitions:

Long Run

In economics, this refers to a period in which all factors of production and costs are variable, allowing full adjustment to changes.

Economic Profits

The disparity between a company's overall income and its combined direct and indirect expenses.

Close Substitutes

Products or services that can serve almost the same purpose, making them almost interchangeable in the eyes of consumers.

Monopolistically Competitive Industry

A market structure where many firms sell products that are similar but not identical, allowing for competition based on factors other than just price.