Senior management is most likely to understate business performance in the financial statements for which of the following reasons?
A) To reduce the value of an owner-managed business for purposes of a divorce settlement
B) To comply with loan covenants
C) To increase the value of a corporate unit whose management is planning a buyout
D) To trigger performance-related compensation or earn-out payments

Question

Quizplus · Accepted Answer

Understating business performance can reduce the apparent value of a business, which may be beneficial in a divorce settlement to minimize the financial settlement amount.

Senior Management Is Most Likely to Understate Business Performance in the Financial