In the Cleveland Custom Cabinets Case, the Owner of the Company

question 27

Multiple Choice

In the Cleveland Custom Cabinets case, the owner of the company thought it was all right to manipulate the financial statement numbers primarily because

• A)He wanted to improve earnings to increase the share price of company stock.
• B)The treatment recommended by the owner for estimating overhead conformed to GAAP.
• C)He was the sole owner of the company and controlled the board of directors.
• D)All of the above.

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Definitions:

Worksheet

A document or spreadsheet used for planning, adjusting entries, and preparing financial statements before they are finalized in official reports.

Income Statement

A financial statement that reports a company's financial performance over a specific period by detailing revenues, expenses, and net income.

Balance Sheet

A financial statement that provides a snapshot of a company's financial condition at a specific point in time, showing assets, liabilities, and equity.

Permanent Account

A balance sheet account that carries its ending balance over to the next accounting period, such as assets, liabilities, and equity accounts.