Question

The main difference between a discretionary and nondiscretionary accrual is: Discretionary accruals are items that management has full control over Discretionary accruals always lead to an increase in earnings Discretionary accruals arise from transactions considered normal for the firm Discretionary accruals are based on changes in the fundamental performance of the firm

Answer 1

Answer:

The correct answer to the following question is option A) Discretionary accruals are items that management has full control over .

Explanation:

Non discretionary accruals can be described as those expenses ( that are obligatory in nature ) which are yet to be realized by the company but such expenses are already recorded in the books of accounts . Examples of such expenses can be like employees next month salaries.

Discretionary accruals can be described as those expenses ( that are non obligatory in nature ) which are yet to be realized by the company but such expenses are already recorded in the books of accounts . Example of such expenses are bonuses for the employees . These are such expenses on which management has full control ,as it not an obligation for a company to incurred such expenses.