单选题

The use of estimates in financial reporting is best described as:

A、 acceptable despite the risk of manipulation by management.
B、 a factor that reduces the understandability of financial statements.
C、 avoidable through sophisticated accounting and auditing techniques.

【正确答案】 A

【答案解析】

The use of estimates creates limitations in the accounting model because estimates provide a vehicle for manipulation by unscrupulous management. However, estimates are considered necessary to the faithful representation of the economic performance and position of a company.