The extent and timing of recognition of assets are important because:
A)They can affect the decision making for users of financial statements
B)They can affect the calculation of ratios which are important inputs for debt covenants
C)They can affect management compensation
D)All of the above

Question

Quizplus · Accepted Answer

All of the choices are correct. Recognition of assets affects decision making for users of financial statements because it provides information about the entity's financial position, performance, and liquidity. It affects the calculation of ratios which are important inputs for debt covenants because financial ratios often rely on recognition and measurement of assets. Lastly, it can affect management compensation because some compensation plans are linked to financial performance.

The Extent and Timing of Recognition of Assets Are Important