The ways that companies try to reduce investors' skepticism about the credibility of the companies' financial reports include all of the following except
A) Voluntarily disclosing additional information
B) Hiring auditors with excellent reputations for competence and objectivity to audit their financial statements
C) Using accrual management techniques
D) Establishing a reputation for transparency in financial reporting

Question

Quizplus · Accepted Answer

Accrual management techniques are not a way to increase credibility in financial reporting. In fact, they can be used to manipulate financial statements and misrepresent the true financial position of a company. The other options (voluntarily disclosing additional information, hiring reputable auditors, and establishing a reputation for transparency) are all ways that companies can increase credibility and reduce investors' skepticism.

The Ways That Companies Try to Reduce Investors' Skepticism About