Which of the Following Is an Aggressive Accounting Practice

question 34

Multiple Choice

Which of the following is an aggressive accounting practice?

• A)Change from straight-line to double-declining balance depreciation.
• B)Record sales revenue before it is actually earned.
• C)Adjust the allowance for uncollectible accounts to a larger amount.
• D)Record inventory at lower of cost or market rather than at cost.

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Definitions:

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments, not including inventory, reported in the cash flow statement.

Financing Activities

Transactions that result in changes in the size and composition of the equity capital or borrowings of the entity.

Common Stock

Equity securities representing ownership in a company, entitling holders to vote on corporate matters and receive dividends.

Deferred Tax Liability

A tax obligation that a company owes in the future due to temporary differences between its financial accounting and tax accounting practices.