Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 1 - Financial Accounting and Accounting Standards - Review and Practice - Questions - Page 23: 22


Ideally, economic consequences refers to the impact that is brought about by the effects of accounting reports on the affluence position of users and issuers of financial information and the decision-making behavior of politics could be detrimental financial effects on providers of financial information the rules will be subject to manipulation for the purpose of furthering the already set policies at the moment. In addition, no matter how the rule makers may be; if the information is designed to indicate that investing in a given enterprise involves less risk that it actually does or is designed to encourage investment in a particular segment of the economy, financial reporting will suffer an irreplaceable loss of credibility.

Work Step by Step

In the same manner, accounting information extensively impacts various users in quite a variety of ways which leads to affluence transfers among these various groups.
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