Principles of Accounting Volume 1
19th Edition
ISBN: 9781947172685
Author: OpenStax
Publisher: OpenStax College
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 8, Problem 18MC
What would be a reason a company would want to overstate income?
A. to help nudge its stock price higher
B. to lower its tax bill
C. to show a decrease in overall profits
D. none of the above
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
What would be a reason a company would want to overstate income?A. to help nudge its stock price higherB. to lower its tax billC. to show a decrease in overall profitsD. none of the above
A company could use other gains and losses to
manipulate its stock price.
reduce reported sales, general and administrative expenses.
exaggerate income from operations.
do all of these.
Why does income smoothing generally lead to a higher share value?
a. It reduces the perceived risk of the companyb. It leads to higher perceived incomec. It is perceived as increasing the chance of insolvencyd. None of the above.
Research into income smoothing has concluded that
a. Smoothed income indicates high earnings qualityb. Smoothed income indicates low earnings qualityc. The findings are mixed with regards to earnings qualityd. There is no relationship between income smoothing and earnings quality
Chapter 8 Solutions
Principles of Accounting Volume 1
Ch. 8 - Which of the following would a fraudster perceive...Ch. 8 - Internal control is said to be the backbone of all...Ch. 8 - What is the best way for owners of small...Ch. 8 - Which of the following is not considered to be...Ch. 8 - There are several elements to internal controls....Ch. 8 - A company is trying to set up proper internal...Ch. 8 - There are three employees in the accounting...Ch. 8 - Which one of the following documents is not needed...Ch. 8 - What is the advantage of using technology in the...Ch. 8 - Which of the following assets require the...
Ch. 8 - Which of the following is true about the...Ch. 8 - The external auditor of a company has certain...Ch. 8 - Petty cash is used to ________. A. avoid having to...Ch. 8 - A company has decided to start a petty cash fund...Ch. 8 - Which of the following items are found on a book...Ch. 8 - Which of the following are found on the bank side...Ch. 8 - What would be a reason a company would want to...Ch. 8 - What would be a reason a company would want to...Ch. 8 - At what point does revenue recognition occur? A....Ch. 8 - What is an example of perceived opportunity as one...Ch. 8 - What is an example of rationalization as one of...Ch. 8 - What is an example of incentive as one of the...Ch. 8 - Why is it important to have a very sound and...Ch. 8 - The information technology departments of all...Ch. 8 - What are the functions of the internal control?Ch. 8 - Discuss the importance of a company having proper...Ch. 8 - What is the role of the Sarbanes-Oxley Act and the...Ch. 8 - Why is it important to have a petty cash fund...Ch. 8 - Is it required to have only one petty cashier or...Ch. 8 - Technology can be used to support a strong...Ch. 8 - What is the purpose of the bank reconciliation?Ch. 8 - What should be done if differences are found...Ch. 8 - Record the following transactions: A. Started a...Ch. 8 - Record the following transactions: A. Started a...Ch. 8 - Record the following transactions: A. Started a...Ch. 8 - Record the following transactions: A. Started a...Ch. 8 - The bank reconciliation shows the following...Ch. 8 - The bank reconciliation shows the following...Ch. 8 - Using the following information, prepare a bank...Ch. 8 - Prepare the journal entry to reconcile the bank...Ch. 8 - Using the following information, prepare a bank...Ch. 8 - Prepare the journal entry to reconcile the bank...Ch. 8 - Using the following information, prepare a bank...Ch. 8 - Prepare the journal entry to reconcile the bank...Ch. 8 - Record the following transactions: A. Started a...Ch. 8 - Record the following transactions: A. Started a...Ch. 8 - Record the following transactions: A. Started a...Ch. 8 - Record the following transactions: A. Started a...Ch. 8 - The bank reconciliation shows the following...Ch. 8 - The bank reconciliation shows the following...Ch. 8 - Using the following information, prepare a bank...Ch. 8 - Prepare the journal entry to reconcile the bank...Ch. 8 - Using the following information, prepare a bank...Ch. 8 - Prepare the journal entry to reconcile the bank...Ch. 8 - Using the following information, prepare a bank...Ch. 8 - Prepare the journal entry to reconcile the bank...Ch. 8 - On September 1, French company has decided to...Ch. 8 - On May 2 Kellie Company has decided to initiate a...Ch. 8 - Domingo Company started its business on January 1,...Ch. 8 - Prepare a trial balance using the journal entries...Ch. 8 - Inner Resources Company started its business on...Ch. 8 - PA6. 8.4 Prepare a trial balance using the journal...Ch. 8 - Identify where each of the following transactions...Ch. 8 - Which of the following transactions will require a...Ch. 8 - Domingo Company received the following bank...Ch. 8 - Prepare the journal entry required to reconcile...Ch. 8 - Inner Resources Company received the following...Ch. 8 - Prepare the journal entry required to reconcile...Ch. 8 - On June 1 French company has decided to initiate a...Ch. 8 - On July 2 Kellie Company has decided to initiate a...Ch. 8 - Hajun Company started its business on May 1, 2019....Ch. 8 - Prepare a trial balance using the journal entries...Ch. 8 - Lavender Company started its business on April 1,...Ch. 8 - Prepare a trial balance for Lavender Company using...Ch. 8 - Identify where each of the following transactions...Ch. 8 - Which of the following transactions will require a...Ch. 8 - Hajun Company received the following bank...Ch. 8 - Prepare the journal entry required to reconcile...Ch. 8 - Leann Company received the following bank...Ch. 8 - Prepare the journal entry required to reconcile...Ch. 8 - A retail store normally has three people working...Ch. 8 - Visit a favorite eatery. Describe some of the...Ch. 8 - A manufacturing plant was finding a huge increase...Ch. 8 - The vice president of finance asks the accounts...Ch. 8 - Even though technology has improved the internal...Ch. 8 - A bank reconciliation takes time and must balance....Ch. 8 - The bank reconciliation revealed that one deposit...
Additional Business Textbook Solutions
Find more solutions based on key concepts
How are planning, implementation, and controlling related?
Principles of Management
E6-14 Using accounting vocabulary
Learning Objective 1, 2
Match the accounting terms with the corresponding d...
Horngren's Accounting (11th Edition)
Regal Executive, Inc., produces executive motor coaches and currently manufactures the cent awnings that accomp...
Principles of Accounting Volume 2
Discussion Questions 1. What characteristics of the product or manufacturing process would lead a company to us...
Managerial Accounting (4th Edition)
What are the four elements of the budgeting cycle?
Cost Accounting (15th Edition)
Discussion Questions 1. What characteristics of the product or manufacturing process would lead a company to us...
Managerial Accounting (5th Edition)
Knowledge Booster
Similar questions
- What would be a reason a company would want to understate income? A. to help nudge its stock price higher B. to lower its tax bill C. to show an increase in overall profits D. to increase investor confidencearrow_forwardWhich ONE of the following statements is FALSE? O Firms report peripheral gains and losses on a pretax basis. If you eliminate a gain or loss, you should also eliminate the related tax effect from income tax expense. O Announcements of restructurings are typically associated with stock price increases. Restructurings are expected to yield operating efficiencies or strategic benefits and, thus, will result in higher future expenses and lower future revenues. O Firms revalue certain assets and liabilities each period even though firms have not yet realized the value change in a market transaction. The related unrealized gains and losses are reported as comprehensive income.arrow_forwardIf the present value of a firm’s marginal financial distress costs are less than the present value of its marginal tax shield, the company Select one: a. has too much debt in its capital structure b. should increase the amount of debt in its capital structure c. has an optimal capital structure d. should increase the amount of equity in its capital structure e. none of the abovearrow_forward
- All of the following are likely to result in the use of less debt in a company's capital structure EXCEPT A. desire to maintain a high credit rating. B. desire to maintain financial flexibility. C. insufficient internal funds. D. a decrease in a company's marginal tax rate.arrow_forwardNonearrow_forwardWhich of the following is false regarding book and market values? Select one: O a. Financial managers should rely on book values, and not market values, when analyzing the firm's tax liability. O b. Book value is an accounting summary of value and is inferior to market value as a source of current information regarding the true value of the firm. c. Market value always exceeds book value. O d. The market value of fixed assets is often difficult to determine.arrow_forward
- Seeking to maximise the current year’s profit is not a sensible objective for most businesses for several reasons. Which is the only one of the following that is not such a reason? Group of answer choices It can be achieved by increasing the number of shareholders. It ignores wealth generation. It ignores risk. It ignores longer term profitability.arrow_forwardA company's market value is generally less than its book value. True of Falses ?arrow_forward6arrow_forward
- Suppose a company increases the price of its product and demand hardly declines.which of the following will increase? A) profit margin B) return - on - equity C) taxes D) all the abovearrow_forwardExplain in full detail why the following statement is false: "Financial managers should not focus on the present stock value of the company. Instead, they should focus on the profitability of the company. Doing so will result in increasing the value of the stock.arrow_forwardWhich of the following statements is false regarding the abnormal earnings approach to valuation? Multiple Choice The method uses earnings and equity book value numbers as direct inputs in the valuation process. The method uses the cost of capital as a fundamental economic benchmark. This approach produces results that are generally equivalent to the free cash flow model. This approach is based on the notion that the value of a company is driven primarily by the level of earnings.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeBusiness/Professional Ethics Directors/Executives...AccountingISBN:9781337485913Author:BROOKSPublisher:Cengage
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Business/Professional Ethics Directors/Executives...
Accounting
ISBN:9781337485913
Author:BROOKS
Publisher:Cengage