32. Which of the following statements is incorrect? A. Accountants must often us

Question

32. Which of the following statements is incorrect?

A. Accountants must often use judgment when deciding when to recognize revenue B. Earnings management occurs when managers manipulate financial information and misrepresent the firm's financial position and performance. C. Very few amounts reported on the financial statements are based upon assumptions. D. An example of a judgment in accounting for Accounts Receivable is the percentage of credit sales that may be uncollectible An example of a judgment in accounting for product warranties is the amount of warranty expense to be accrued as a percent of sales E.

Explanation / Answer

Solution:-

C. Very few amounts reported in the financial statements are based upon assumptions.

Explanation:-

Many amounts reported on financial statements are based on assumptions. Depreciation methods make assumptions about residual value and useful life to manipulate earnings.

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