Which of the following is most likely to refl ect conservative accounting choices?A . Decreased reported earnings in later periodsB . Increased reported earnings in the current periodC . Increased debt reported on the balance sheet at the end of the current period
Which of the following is most likely to refl ect conservative accounting choices?A . Decreased reported earnings in later periodsB . Increased reported earnings in the current periodC . Increased debt reported on the balance sheet at the end of the current period
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Which of the following is most likely to refl ect conservative accounting choices?
A . Decreased reported earnings in later periods
B . Increased reported earnings in the current period
C . Increased debt reported on the
Expert Solution
Conservative Accounting Policies
Conservative accounting uses methods that are more likely to understate financial performance, and do not usually create a sustainability issue. This arises from the fact that they decrease a company’s reported performance and financial position in the current period and may increase its reported performance and financial position in later periods.
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