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:

Ethnomethodologists

Researchers who study how people use everyday interactions to construct a shared social reality.

Conversational Analyses

A method for studying the construction and patterns of social interaction within natural conversation.

Applause

The expression of approval or admiration for someone or something through clapping.

Ethnomethodological

Relates to a sociological method that studies the ways people make sense of their everyday lives.