1.Which of the following factor is most likely to lower accounting quality?

A.Managers' accounting choices.

B.Litigation risk.

C.Accounting principles.

D.External auditing.

2.A company is experiencing a period of strong financial performance. In order to increase the likelihood of exceeding forecasts in the next reporting period, the company would most likely undertake accounting choices that:

A.Inflate reported revenue in the current period.

B.Delay expense recognition in the current period.

C.Decrease accruals in the current period.

D.All of the above

3.Which of the following situations will most likely motivate managers to inflate earnings in the current period?

A.Earnings in excess of analysts' forecasts

B.Possibility of bond covenant violation

C.The manager's compensation is not tied to stock price performance

The manager has increased the market share of products significantly.