Which of the following is a true statement?
A)When arbitrary allocations are used, income statements have very little information content.
B)The calculation aspects of most expense measurements are easily resolved under historical cost accounting.
C)When arbitrary allocations are used, income statements still have information content.
D)Capital market research has shown that the usefulness of accounting numbers is best resolved using the deductive logic of the allocation problem.

Question

Quizplus · Accepted Answer

When arbitrary allocations are used, income statements still have information content. This is because even if the allocations are not based on direct cause-and-effect relationships, they still provide some indication of the company's performance and financial position. However, the relevance and reliability of the information may be compromised by the use of arbitrary allocations.

Which of the Following Is a True Statement