Which of the following explain subjectivity in the accounting process used by banks to determine their earnings? Check all that apply.

a. Publicly traded banks are required to have their financial statements audited by an independent auditor.

b. Banks tend to overstate the level of loan losses during periods of strong economic growth.

c.The reporting of a banks earnings requires managerial judgment about the amount of existing loans that will default.

d.Banks can understate the level of loan losses to temporarily inflate their reported earnings.

The subjectivity in accounting increases a banks earnings and increases investors' trust in that banks performance.

a.True

b.False