An implication of the fact that traditional financial accounting is based on a model that emphasises property rights is:
A) fair values become of critical importance.
B) that such rights are recognised as intangible assets.
C) many social costs are ignored.
D) that these financial reports are always prepared on a 'true and fair' basis.
E) that auditors have an easier job in verifying financial statements.

Question

Quizplus · Accepted Answer

Traditional financial accounting based on property rights model ignores the social costs and externalities and focuses on the financial assets of a firm. This approach does not consider the negative impact of business activities on society and the environment. Therefore, social costs are ignored, which can have a significant impact on the firm's performance and sustainability.

An Implication of the Fact That Traditional Financial Accounting Is