Conducting an error analysis
Problem: When conducting an error analysis, what must a CPA consider? Why? What might happen if these items are not taken into consideration?
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On the surface, earnings management via overaccruals sounds bad. However, is earning management such a bad phenomenon for investors?
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When conducting an error analysis, what must a CPA consider? Why? What might happen if these items are not taken into consideration?
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Perry Corp. reports operating expenses in two categories: (1) selling and (2) general and administrative. The adjusted trial balance at December 31, 2010, included the following expense accounts:
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