Which of the Following Is NOT an Earnings Management Technique

question 23

Multiple Choice

Which of the following is NOT an earnings management technique?

• A)Recording revenue the customer is obligated to pay
• B)Recording revenue when future services remain to be provided
• C)Recording sales that lack economic substance
• D)Including investment income or gains as part of revenue

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Definitions:

Market Inefficiency

A condition where all available information is not fully incorporated into asset prices, leading to opportunities for higher returns.

Siamese Twin Companies

Companies listed in different countries that share an operational business but trade separately on the stock exchange.

Equity Carve-Outs

A type of corporate restructuring where a company creates a new, independent company by selling or distributing new shares of its existing division or subsidiary.

Closed-End Funds

A type of investment fund with a fixed number of shares that are traded on a stock exchange.