Manipulation of Reported Earnings

question 7

Multiple Choice

Manipulation of reported earnings:

• A)Affects wealth transfers between the company and others.
• B)Can be both legal and illegal.
• C)Includes income smoothing.
• D)All of the above.

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Definitions:

Asset

Resources controlled by a business from which future economic benefits are expected to flow to the business, including both physical items and intangible properties.

Credit

An entry on the right side of a double-entry bookkeeping system that increases liabilities and equity or decreases an asset or expense.

Cash Received

The amount of money received by a company during a period from various sources including operations, investments, and financing.

Customer

An individual or entity that purchases goods or services from a business, essential for the revenue-generating activities of the company.