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:

Manipulation

Manipulation in financial contexts refers to unethical or illegal actions to misleadingly influence market prices, company performance, or financial reports.

Net Price Method

Net price method is a pricing strategy that accounts for discounts, rebates, and other incentives upfront, presenting the final price to consumers.

Sales Discounts

Reductions granted by a seller to the buyer for early payment or for meeting other conditions defined in the sales agreement.

Gross Sales

Gross sales refer to the total sales revenue of a company without deducting any sales returns, allowances, or discounts.