Which of the Following Would Increase Earnings but Lower the Quality

question 142

Multiple Choice

Which of the following would increase earnings but lower the quality of reported earnings?

• A) Writing off obsolete inventory
• B) Embarking on a capital expansion
• C) Increasing operating expenses.
• D) Decreasing operating expenses

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Definitions:

Objective Right

A principle or standard of behavior that is universally accepted as correct or moral, independent of individual thought or opinion.

Ambiguity

The quality of being open to more than one interpretation; inexactness.

Conformity Effect

The tendency of individuals to align their attitudes, beliefs, and behaviors with those of a group.

Outnumbered

Being in a situation where the number of individuals on one side is considerably less than those on the opposing side, often leading to a disadvantageous position.