Which of the Following Actions Can Distort Company Records and Result

question 143

Multiple Choice

Which of the following actions can distort company records and result in fraudulent financial reporting?

• A) Prepaying an expense and recording it as an asset
• B) Collecting revenue in advance of earning it
• C) Recording income that has not yet been earned
• D) Recording an expense that has been incurred but has not yet been paid

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Definitions:

Discretionary Fiscal Measures

Discretionary fiscal measures are deliberate actions by the government to adjust its spending and taxation rates to influence the nation's economy, akin to discretionary fiscal policy with a focus on specific measures.

Budget Deficits

A financial situation where a government's expenditures exceed its revenues over a specified period, leading to borrowing or drawing down reserves.

Functional Finance

An economic theory that prioritizes achieving full employment and stable prices over balancing budgets.

Potential GDP

The maximum output an economy can produce without causing inflation, when operating at full employment.