Economic consequences of accounting standard-setting means:
A) Standard-setters must give first priority to ensuring that companies do not suffer any adverse effect as a result of a new standard.
B) Standard-setters must ensure that no new costs are incurred when a new standard is issued.
C) The objective of financial reporting should be politically motivated to ensure acceptance by the general public.
D) Accounting standards can have detrimental impacts on the wealth levels of the providers of financial information.

Question

Quizplus · Accepted Answer

Accounting standards can have a significant impact on the wealth levels of the providers of financial information, such as companies, investors, and other stakeholders. For example, if a new accounting standard requires companies to recognize assets or liabilities at fair value, it could result in significant changes in reported financial statements, which could affect investors' perceptions of the company's financial health and value. This, in turn, could impact stock prices, investor confidence, and other economic factors. Therefore, accounting standard-setting must take into account the potential economic consequences of the standards that are issued.

Economic Consequences of Accounting Standard-Setting Means