What is meant by the term economic consequences of accounting policy choice?
A) The selection of accounting policies is expensive and time-consuming.
B) Accounting numbers affect the financial positions of various users.
C) Accounting policies are selected to minimise the position of creditors.
D) The creation of accounting standards consumes a large amount of resources.

Question

Quizplus · Accepted Answer

The term "economic consequences of accounting policy choice" refers to how the selection of accounting policies can affect the financial positions of various users, such as investors, creditors, and managers. Accounting numbers are used in evaluating the performance and stability of a company, and the choice of accounting policies can impact these evaluations. Therefore, the economic consequences of accounting policy choice are related to how financial statements are perceived and used by stakeholders.

What Is Meant by the Term Economic Consequences of Accounting