The political cost hypothesis dictates that managers will use accounting policies thata. Report the future earnings as current earnings.O b. Report the future earnings as past earnings.Oc. Report the past earnings as current earnings.O d. Report the current earnings as future earnings.

Political cost hypothesis states that if the political costs are higher, managers use accounting…

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Business

Accounting

political cost hypothesis

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter14: Valuation: Market-based Approach

Section: Chapter Questions

Problem 8QE

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Concept explainers

Management by Exception

A manager’s job is a very tough one. A manager needs to look at the various areas of work and as a manager he has to look after two or more important jobs or activities at the same time for the growth of the business. In order to do all these things in an effective manner, a manager must adopt or practice different management styles and tactics.

Question

The political cost hypothesis dictates that managers will use accounting policies that
a. Report the future earnings as current earnings.
O b. Report the future earnings as past earnings.
Oc. Report the past earnings as current earnings.
O d. Report the current earnings as future earnings.

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