Which of the Following Statements Apply to the Political Cost

question 7

Multiple Choice

Which of the following statements apply to the political cost hypothesis:

• A) Political costs arise as a result of an entity's relationships with shareholders and lenders.
• B) Managers would prefer accounting policies that increase profit in order to compensate for political costs.
• C) Smaller entities are more likely to be the target of lobby groups.
• D) Managers of larger entities are more likely to choose accounting policies that reduce profit in order to avoid political costs.

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Definitions:

Retrieval Cue

A stimulus that allows or aids the recall of information stored in memory.

Mnemonic Device

A tool or strategy used to improve memory by making information easier to remember, often through the use of associations, patterns, or acronyms.

Memory Chunk

A cognitive strategy where individual pieces of information are grouped together into larger units, making them easier to remember.

Retrieval Cue

Stimuli or prompts that aid the recall of information stored in memory.