Which of the Following Is NOT an Accounting Method That

question 29

Multiple Choice

Which of the following is NOT an accounting method that could be chosen by a company to increase reported profits?

• A) Understating allowance for doubtful debts
• B) Classifying longer-term receivables as current assets
• C) Changing estimates of the useful life of plant and equipment
• D) Changing from the weighted average to the FIFO method of inventory valuation in a period of rising prices

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Definitions:

Price-Weighted

Refers to a stock market index in which each company's stock influences the index in proportion to its price per share.

Money Market

A segment of the financial market in which short-term financial instruments, such as Treasury bills and commercial paper, are traded.

Treasury Bond

Long-term, fixed-interest U.S. government debt security with a maturity of more than 10 years.

Certificate of Deposit

A savings certificate with a fixed maturity date and interest rate, issued by a bank to a person depositing money for a specified period of time.