Which of the following statements about a rules-based versus principles-based approach to setting accounting standards is NOT true? 1. A principles-based approach provides management with the flexibility to exercise judgement 2. A rules-based approach provides a relatively more limited scope for earnings management (EM) activity to occur 3. A rules-based approach provides companies with guidance on how they should they should account for various items and situations 4. A principles-based approach allows management to use accounting policy choice as a means of communication

Which of the following statements about a rules-based versus principles-based approach to setting accounting standards is NOT true? 1. A principles-based approach provides management with the flexibility to exercise judgement 2. A rules-based approach provides a relatively more limited scope for earnings management (EM) activity to occur 3. A rules-based approach provides companies with guidance on how they should they should account for various items and situations 4. A principles-based approach allows management to use accounting policy choice as a means of communication

Which of the following statements about the process of forecasting a firms pro forma Financial Statements is NOT true? 1. Forecasts of the firms future activities should be conservative to ensure that the value of the firm is not overstated 2. In developing the pro forma Financial Statements, it is important to have some accounts that expand or contract in response to changes in activities 3. Following the development of sales forecasts, one of the next critical steps is to forecast the firms asset turnover ratio (ATO) 4. In developing the pro forma Financial Statements, it is important to understand both the market for the firms products and the firms marketing plan