A company that understates its revenues while over-stating its expenses as a means to make it appear more profitable than it really is a classic example of accounting fraud.

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This statement correctly describes accounting fraud, where a company manipulates its financial statements to deceive stakeholders into believing the business is more profitable than it actually is. Understating revenues and overstating expenses are common tactics used in this type of fraudulent activity.

A Company That Understates Its Revenues While Over-Stating Its Expenses