Which of the Following Techniques Is NOT Generally Useful to Smooth

question 18

Multiple Choice

Which of the following techniques is NOT generally useful to smooth income

• A) Varying the provision for warranties
• B) Hedging of financial instruments
• C) Using fair value accounting
• D) None of the above, they could all be used to smooth income

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Definitions:

Long-Term Asset

An asset that is expected to provide economic benefits to a business for more than one fiscal year, such as property, plant, and equipment.

Revenue Expenditure

A type of expenditure that does not result in the acquisition of long-term assets and is rather incurred in the day-to-day operations of a business.

New Equipment

Recently acquired or installed machinery or tools intended for operational or productive use in an organization.

Ordinary Maintenance

Routine maintenance and repairs necessary to keep an asset in working condition, not significantly prolonging its life or increasing its value.