Credit risk is unaffected by aggressive application of accounting standards as cash flows are unaffected by financial reporting choices.

Question

Quizplus · Accepted Answer

Aggressive application of accounting standards can affect the reported financial statements, which in turn can impact credit risk assessment, as it may lead to overstatement or understatement of financial performance and thus mislead lenders in evaluating an entity's creditworthiness.

Credit Risk Is Unaffected by Aggressive Application of Accounting Standards