Which method is NOT used to overstate assets?
A) Inappropriately capitalizing costs that should be expensed
B) Recording newly acquired assets at cost instead of fair market value in a healthy economy
C) Creating fictitious accounts receivable or inventory to hide thefts
D) Inflating assets through mergers and acquisitions by manipulation of intercompany accounts and transactions

Question

Quizplus · Accepted Answer

Recording newly acquired assets at cost instead of fair market value in a healthy economy accurately states the value of the company's assets, so it does not overstate them. The other three methods listed involve manipulating or creating false information to inflate the value of assets, which is a form of overstatement.

Which Method Is NOT Used to Overstate Assets