The Practice of Shifting Income from Good Years to Poor

question 60

Multiple Choice

The practice of shifting income from good years to poor years in order to show a record of steady growth is

• A)known as earnings management and is considered unethical.
• B)highly recommended but not required by GAAP.
• C)a basic requirement of accrual accounting.
• D)impossible if Generally Accepted Accounting Principles are followed.

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Definitions:

Income Received

The total amount of money or its equivalent received by an individual or organization before taxes and deductions.

Income Earned

The compensation received by individuals for their participation in productive activities, typically through wages, salaries, or profits.

Henry George

A 19th-century economist known for his ideas on taxation, particularly the proposal that a single tax on land value could replace all other taxes, thereby improving economic equality and efficiency.

Rent

A regular payment made by a tenant to a landlord for the use of land, a building, or other property.