Accruals are potentially troublesome because:
A) They can lead to giving an unmodified audit opinion when it should have been modified
B) They provide an opportunity to manage earnings through aggressive or more conservative estimations
C) They always lead to fraud in financial statements
D) They provide an opportunity to shift debt off the books by setting up an SPE

Question

Quizplus · Accepted Answer

Accruals involve estimation and judgment, which can be manipulated to either inflate or deflate earnings. This can lead to misleading financial statements and a misrepresentation of the company's actual financial position.

Accruals Are Potentially Troublesome Because