The main difference between a discretionary and nondiscretionary accrual is:
A) Discretionary accruals are items that management has full control over
B) Discretionary accruals are based on changes in the fundamental performance of the firm
C) Discretionary accruals arise from transactions considered normal for the firm
D) Discretionary accruals always lead to an increase in earnings

Question

Quizplus · Accepted Answer

Discretionary accruals are items that management has full control over, while nondiscretionary accruals are based on changes in the fundamental performance of the firm and arise from transactions considered normal for the firm. Discretionary accruals do not always lead to an increase in earnings, as management may choose to use discretion to decrease earnings as well.

The Main Difference Between a Discretionary and Nondiscretionary Accrual Is