Which if the following is a negative consequence of recording byproducts in the accounting records when the sale occurs?
A) the revenue from the byproducts is usually fairly large and the accounting records will be distorted
B) earnings cannot be timed under this method
C) managers can be tempted to stockpile byproducts
D) it involves complex calculations compared to the production method

Question

Quizplus · Accepted Answer

Recording byproducts in the accounting records when the sale occurs can tempt managers to stockpile byproducts in order to manipulate earnings, as they may delay sales to inflate earnings in a future period. This does not necessarily involve complex calculations, affect the timing of earnings recognition in a way that earnings cannot be timed, or distort records due to the typically large revenue from byproducts, as byproducts are often minor in value compared to the main products.

Which If the Following Is a Negative Consequence of Recording