Why Are Overstated Reserves Sometimes Referred to as "Cookie Jar

question 28

Multiple Choice

Why are overstated reserves sometimes referred to as "cookie jar" reserves?

• A) Companies involved in mergers or acquisitions overstate their liabilities by creating "cookie jar" reserves.
• B) The reserve is commonly created during bad times or when routine senior management changes occur.
• C) Some companies may require customers to make deposits for future goods or services that can be intentionally recorded as revenue, which is like money stored in a cookie jar.
• D) Like money stored in a cookie jar, overstated revenues represent a stash of accounting earnings that can be used to bolster the perceived performance of the company in the future.

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Definitions:

Cost per Thousand (CPM)

A metric used in advertising to denote the price of 1,000 advertisement impressions on one webpage.

Frequency

The rate at which something occurs or is repeated over a particular period of time or in a given sample.

Reach

A measure of the extent to which content, advertising, or communication is seen by an audience.

Rating

A system or scale that evaluates or grades certain characteristics or performances, often used in contexts like entertainment, finance, or product quality.