Which of These Is NOT an Assumption on Which Positive

question 18

Multiple Choice

Which of these is NOT an assumption on which positive accounting theory is based?

• A) People are rational
• B) People are wealth maximisers
• C) People prefer to act altruistically
• D) None of the above, i.e. they are all assumptions of positive accounting theory?

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Definitions:

Transactions

Transactions refer to the exchange of goods, services, or funds between two or more parties, forming the basis of business activities and financial operations.

Investee

A company or entity in which an investor holds a significant interest, but not majority control.

Gross Profit

The financial metric obtained by deducting the cost of goods sold from revenue, indicating the efficiency of a company in managing its labor and supplies in the production process.

Intra-entity Sales

Transactions that occur between divisions or subsidiaries within the same parent company, affecting consolidated financial statements.