An oil company received poor publicity after an oil spill in Lake Erie. The costs of the future lost sales resulting from the bad publicity are not included in the results of operations provided to management even though the loss in sales was substantial. This scenario is an example of which type of EMA implementation challenge?

Question

Quizplus · Accepted Answer

The scenario reflects the historical orientation of accounting, where traditional accounting practices focus on past transactions and do not account for future costs or losses, such as those from bad publicity affecting future sales.

An Oil Company Received Poor Publicity After an Oil Spill