Which of the Following Is a Possible Reason Why Security

Multiple Choice

Which of the following is a possible reason why security prices were found to respond to changes from pooling to purchase accounting for combinations?

A) A change from pooling to purchase accounting does not affect cash flow.
B) Differences between purchase and pooling accounting affect only book income.
C) The change could have affected dividend distribution because of debt covenants.
D) Income would normally be higher under purchase accounting than pooling.