What Are Some Ways in Which Earnings Management on Construction

question 85

Multiple Choice

What are some ways in which earnings management on construction contracts can be prevented?

• A)Determining the degree of completion in a manner that best represents the underlying performance of the project.
• B)Judiciously making estimates for the cost-to-cost approach that maximize earnings in the current year.
• C)Underestimating future costs.
• D)Not using engineering estimates or the cost-to-cost approach.

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Definitions:

Physical Attachment

The process of affixing or connecting an object to another, often in a manner that requires physical force or means.

Injury

Physical harm or damage to a person's body caused by an accident or external force.

Personal Property

Movable items owned by an individual or corporation, as opposed to real estate or real property.

Restrictive Covenant

A provision in a deed or lease restricting the actions the property's owner may take with the property.