Many firms provide similar types of airline services with similar types of assets.They each received unqualified opinions from their independent auditors.Yet, Flash Airlines appears to apply its accounting principles more aggressively in income-enhancing ways relative to its competitors.The choices for Flash Airlines in applying generally accepted accounting principles under the accrual basis of accounting include(s):
A)depreciable lives for buildings and equipment.
B)estimated uncollectibles for accounts receivable.
C)estimated warranty costs.
D)all of the above.
E)none of the above.

Question

Quizplus · Accepted Answer

All of the choices given (A, B, and C) are acceptable ways of applying generally accepted accounting principles under the accrual basis of accounting. Flash Airlines may be choosing to use more aggressive estimates or assumptions for these items, which could be enhancing their reported income relative to their competitors who are using more conservative estimates. However, as long as Flash Airlines' accounting practices are in compliance with GAAP, there is nothing inherently wrong with their approach.

Many Firms Provide Similar Types of Airline Services with Similar