Class 04. Flashcards
expense recognition
1
Q
what is expense recognition?
A
recording expenses when incurred
2
Q
what are common account to manipulate expenses?
A
- COGS/Inventory
- PPE/Amortization
- Allowance for Uncollectibles
3
Q
why is capitalization a common method of manipulation?
A
manipulating the years affects net income
4
Q
how do you manipulate expenses?
A
- reserve accounts
- delay write downs
5
Q
what is a negative retained earnings?
A
accumulated deficit
6
Q
how can you check for expense manipulation?
A
by applying the same rates to the year you believe is manipulated + compare across years
