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
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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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 balance sheet at the end of the current period

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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