Under the debt hypothesis for accounting policy choice:

A) managers act in their own interests and therefore prefer more remuneration.
B) managers of entities with bonus plans prefer accounting policies that increase profit in the long-term.
C) managers have no discretion in choosing accounting policies relating to debt.
D) managers of entities with high leverage are likely to choose accounting policies that increase profit and equity.

Debt Hypothesis

A theory suggesting that the level of a company's debt influences its value by affecting tax payments and bankruptcy risks.

Accounting Policy

Own sets of beliefs, bases, manners, dictates, and systems placed by a corporation in the making and publicizing of its financial declarations.

High Leverage

A situation where a company or individual has a significant level of debt compared to equity, potentially increasing financial risk but also possible returns.