Reading 49: Residual Income Valuation - LOS h ～ Q1-3

答案和详解如下：

1．In general, firms making aggressive accounting decisions will report book values that are:

A)   lower.

B)   consistent with fair market value.

C)   inflation-adjusted.

D)   higher.

The correct answer was D)

In general, firms making aggressive (conservative) accounting decisions will report higher (lower) book values and lower (higher) future earnings.

2．In general, firms making aggressive accounting decisions will report future earnings that are:

A)   higher.

B)   lower.

C)   consistent with fair market value.

D)   inflation-adjusted.

The correct answer was B)

In general, firms making aggressive (conservative) accounting decisions will report higher (lower) book values and lower (higher) future earnings.

3．Reported accounting data are most likely to bias an estimate of residual income when:

A)   standards allow charges directly to stockholders' equity that are also reflected on the income statement.

B)   the clean surplus relation holds.

C)   standards allow charges directly to stockholders' equity while bypassing the income statement.

D)   balance sheets reflect fair market value.

The correct answer was C)

Bias is likely when standards allow charges directly to stockholders’ equity while bypassing the income statement. The other responses are consistent with the use of data that will not introduce a bias.