TRUE OR FALSE ____ 2. The materiality of an amount can be adequately assessed th
ID: 2576721 • Letter: T
Question
TRUE OR FALSE
____ 2. The materiality of an amount can be adequately assessed through the use of quantitative thresholds.
____3. The calculation of proforma earnings typically involves a departure from generally accepted accounting principles.
____4. The Securities and Exchange Commission provides recommendations to investors regarding which companies represent the safest investments.
____5. Adoption of a principles-based accounting standard setting system in the United Statescould make it more difficult for financial statement preparers and auditors to defend themselves in lawsuits related to financial statements.
____6.. Managers subject to an earnings-based bonus plan typically manage earnings downward if the reported earnings are substantially in excess of the maximum bonus level.
____7. Company earnings are considered to be of higher quality when management chooses accounting measurement rules that recognize revenues sooner rather than later, but that delay the recognition of expenses.
____8. Most managers of publicly traded companies prefer an earnings trend line that rises very steeply.
____9. The Financial Accounting Standards Board currently has no rules governing the recognition of large restructuring charges.
____10. A company with a large number of diverse operating units is well suited to earnings management.
Explanation / Answer
2.true
The materiality of an amount can be adequately assessed through the use of quantitative thresholds.
3.true
The calculation of proforma earnings typically involves a departure from generally accepted accounting principles.
4.false
The Securities and Exchange Commission provides recommendations to investors regarding which companies represent the safest investments.
5.false
Adoption of a principles-based accounting standard setting system in the United Statescould make it more difficult for financial statement preparers and auditors to defend themselves in lawsuits related to financial statements.
6.true
Managers subject to an earnings-based bonus plan typically manage earnings downward if the reported earnings are substantially in excess of the maximum bonus level.
7.true
Company earnings are considered to be of higher quality when management chooses accounting measurement rules that recognize revenues sooner rather than later, but that delay the recognition of expenses.
8.false
Most managers of publicly traded companies prefer an earnings trend line that rises very steeply.
9.false
The Financial Accounting Standards Board currently has no rules governing the recognition of large restructuring charges.
10.true
A company with a large number of diverse operating units is well suited to earnings management.
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