There Are Three Main Types of Revenue Manipulations

question 48

Multiple Choice

There are three main types of revenue manipulations.Which of the following revenue manipulations affects the valuation objective?

• A)recording subsequent period sales as current period sales
• B)the use of "bill and holds" (goods are invoiced but not shipped)
• C)understatement of bad debts
• D)creation of fictitious sales that are misclassified as revenue

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Definitions:

Shareholders' Equity

The portion of a company's assets that belongs to shareholders after liabilities have been subtracted; also known as net assets or equity.

Credit Statement

A detailed report of an individual's or company's credit history and current credit standing, used by lenders to evaluate creditworthiness.

Statement of Cash Flows

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents.

Liquidity Ratios

Measures of a firm’s ability to meet its short-term obligations.