Which of the Following Would Cause Income of the Current

question 59

Multiple Choice

Which of the following would cause income of the current period to be understated?

• A) Capitalizing research and development costs
• B) Failure to recognize unearned rent revenue
• C) Changing from LIFO to FIFO for merchandise inventory
• D) Understating estimates of asset residual values

---

Definitions:

Stock Appreciation Rights

A type of bonus compensation given to employees that is equivalent to the appreciation (increase in value) of the company stock over a set period.

Compensation Plan

A detailed plan that outlines the salary, wages, benefits, and incentives for employees, designed to motivate and reward them.

Measurement Date

The specific date at which the values of assets and liabilities are determined in the preparation of financial statements.

Stock Appreciation Rights

A type of employee compensation linked to the increase in the company's stock price over a set period, allowing employees to profit from the appreciation without owning the stock.