Fixed Assets Are One Area Where Earnings Management May Be

question 51

True/False

Fixed assets are one area where earnings management may be prevalent due to the judgmental nature of the underlying data.

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Definitions:

Financing Activity

Transactions involving the flow of cash between a company and its owners and creditors, including issuing stocks, paying dividends, and borrowing or repaying loans.

Transactions

The financial events that affect the assets, liabilities, and equity of an entity, involving transfers or exchanges between two parties.

Cash Flows

The net amount of cash being transferred into and out of a business.

General Journal

The primary accounting record used for recording all day-to-day financial transactions of a company.