Since financial decision makers usually obtain accounting information from companies wanting loans or selling stock,this creates a potential ________.
A)agency problem
B)conflict of interest
C)harmonization problem
D)expectations gap

Question

Quizplus · Accepted Answer

The potential conflict of interest arises from the fact that companies wanting loans or selling stock have an incentive to present their financial information in the best possible light, which may not always be an accurate reflection of their financial position. This creates a potential conflict of interest between the financial decision makers and the companies providing the financial information.

Since Financial Decision Makers Usually Obtain Accounting Information from Companies