Asked by Camille Esselin on Apr 29, 2024
Verified
Contracting parties understand that financial reporting flexibility affects how contracts are written and enforced.
Financial Reporting Flexibility
The discretion allowed to managers in choosing how to report financial performance and position, within the bounds of accounting standards and principles.
Contracts Written
Legal agreements created and documented between two or more parties, outlining specific terms and conditions of their arrangement.
- Comprehend the application of financial accounting figures in contracts for the purpose of monitoring compliance and defining terms.
Verified Answer
CS
Courtne SmithMay 05, 2024
Final Answer :
True
Explanation :
Financial reporting flexibility can impact the financial performance of a company, which in turn affects how contracts are written and enforced. For example, if a company is allowed more flexibility in its financial reporting, it may be able to meet certain financial targets in a contract more easily, which could impact the terms of the contract or its enforcement.
Learning Objectives
- Comprehend the application of financial accounting figures in contracts for the purpose of monitoring compliance and defining terms.
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