Firms that compile financial statements according to GAAP:
A)record income and expenses at the time they affect the firm's cash flows.
B)have no discretion over the timing of recording either revenue or expense items.
C)must record all expenses when incurred.
D)can still manipulate their earnings to some degree.
E)record both income and expenses as soon as the amount for each can be ascertained.

Question

Quizplus · Accepted Answer

Firms can manipulate earnings to some degree under GAAP through choices in accounting methods, estimates, and timing of recognizing revenues and expenses.

Firms That Compile Financial Statements According to GAAP