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The Predictions of PAT Formulated by Watts and Zimmerman (1990)are

Question 44

Multiple Choice

The predictions of PAT formulated by Watts and Zimmerman (1990) are largely concentrated on the following predictions:

A) Managers of companies with bonus plans are likely to choose income increasing accounting policies.
B) Managers of companies that are close to violating accounting-based debt covenants are likely to choose income increasing accounting policies.
C) Managers of companies that are subject to greater political costs are likely to choose income decreasing accounting policies.
D) All of the given Answers
E) Managers of companies with bonus plans are likely to choose income increasing accounting policies and managers of companies that are close to violating accounting-based debt covenants are likely to choose income increasing accounting policies.

Correct Answer: