Sam Jones, controller of Mitnikco, spends three days researching the accounting statements to find loopholes in the "rules" and to make a case for recognizing revenue earlier, rather than in later years. In the end, Sam and the other members of management determine that they will reduce the company's deferred revenue accounts and begin accounting for all revenues as agreements are signed. What are the motivations of Mitnikco management based solely on the information above?
A) Pressures.
B) Opportunity.
C) Rationalization.
D) Skepticism.

Question

Quizplus · Accepted Answer

The management of Mitnikco is motivated by rationalization. They are trying to find a way to justify recognizing revenue earlier, rather than in later years. This is likely because they are under pressure to meet certain financial targets, and they believe that recognizing revenue earlier will help them to do so.

Sam Jones, Controller of Mitnikco, Spends Three Days Researching the Accounting