Which of the Following Statements Is Correct with Respect to Set-Off

Multiple Choice

Which of the following statements is correct with respect to set-off of assets and liabilities?

A) An entity will apply set-off to reduce the number of elements reported in the financial statements.
B) An entity will apply set-off to avoid violation of debt covenants in debt contracts.
C) Positive accounting theory predicts the likelihood that managers will apply set-off to increase profits.
D) Positive accounting theory predicts the likelihood that managers will apply set-off to reduce political costs.
E) None of the given answers.