Which of the Following Accounting Practices Are Potentially Misleading or Even

question 16

Multiple Choice

Which of the following accounting practices are potentially misleading or even fraudulent?
I.writing off goodwill as an extraordinary loss
II.using accrual rather than cash basis reporting
III.off-balance sheet liabilities
IV.recognizing revenues prematurely

• A)I and II only
• B)I, II and IV only
• C)III and IV only
• D)I, III and IV only

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Definitions:

Market Return

The overall return generated by the stock market or a specific segment of the market, over a given period.

Residual

The amount remaining after the major part or parts have been accounted for; in finance, often refers to the remainder left after specific calculations, such as dividends from a corporation after major expenses are paid.

Market Index

A measurement of the performance of a specific "basket" of stocks considered to represent a particular market or sector.

Standard Deviation

A statistical measure of the dispersion or variability of a set of data points or investment returns.