42.
Which of the following is NOT an earnings management technique?
43.
In the CVS acquisition of Longs Drug, the SEC concluded that the purchase price
accounting (PPA) was not in compliance with GAAP because:
44.
Each of the following is a common revenue recognition device to manage earnings except:
45.
The best definition of a financial restatement is:
46.
The SEC requires stealth restatements to be:
47.
In the Hertz fraud, the company tried to explain its use of non-GAAP financial measures
by:
48.
Your professor asks you to consider whether earnings management can be justified by
arguing that the net benefits of managing earnings exceeds any harms that may occur.
The professor is asking you to apply what reasoning methods to make the analysis?
49.
You work for a company that always pushes the envelope with respect to reporting
revenues and expenses. You often disagree with the company because its approach to
reporting these amounts cannot be justified from a GAAP perspective. You are upset and
are considering whether this is a company that has a culture you want to be part of. Which
of the following best characterizes the ethical issues of concern?
50.
Debbie and Steve are discussing a lecture given by their ethics professor after class one
day. The professor said that misstatements of earnings are always unethical. Debbie
agrees with this situation but Steve does not. What statement might Steve make to best
support his point of view?
51.
Kelly and Jordan are writing a term paper together on the concept of “faithful
representation” in the financial statements. Kelly is assigned the task of defining it in the
context of an amount being an estimate. Which of the following statements should NOT be
used by Kelly in her description?
52.
The main accounting issues in the Nortel Networks case were:
53.
Sarah’s concern in the Solutions Network case is:
54.
The SEC’s complaint in its case against GE included a charge that the company:
55.
The Harrison Industries case deals with:
56.
The accounting shenanigan used in the Dell Computer case can best be described as:
57.
The auditors in the Tier One Bank case were investigated by the SEC because it:
58.
Which of the following was not an accounting issue in the Sunbeam case?
59.
The Sino-Forest case centered around the:
60.
The North Face case deals with materiality and how auditors employ that metric in an
audit. The following are all true except:
7-30
61.
Which of the following was NOT one of the schemes used by Beazer Homes to manipulate
its earnings?
Essay Questions
7-31
62.
Explain why a company’s reported earnings may not necessarily be an objective measure
of economic reality. Give examples of when this might occur.
7-32
63.
Analyze and discuss when earnings management may be an ethical practice and when it is
an unethical practice.
64.
Discuss all the factors an auditor should consider in making a materiality judgment.
7-36
65.
What is a financial shenanigan and what is it designed to do? Explain each of the financial