Earnings Management Through Aggressive Accounting Is Best Exemplified by

question 45

Multiple Choice

Earnings management through aggressive accounting is best exemplified by

• A) Changing the useful life of a depreciable asset and fully disclosing it in the notes.
• B) Timing transactions such that large one-time gains and losses occur in the same quarter.
• C) Changing the interest rate used in accounting for leases without describing the change in the notes to the financial statements.
• D) Capitalizing as assets expenditures that have no future economic benefit.

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Definitions:

Id

A part of the mind in Freudian psychoanalysis that is responsible for instinctual desires and drives.

Libido

The energy of the sexual drive as a component of the life instinct.

Superego

In psychoanalytic theory, the part of the personality that acts as a moral center, enforcing ethical conduct and societal norms.

Superego

One of the three components of the human psyche in Freudian psychoanalytic theory, representing the moral conscience and the social standards of right and wrong.