TRUE OR FALSE

____ 2. The materiality of an amount can be adequately assessed through the use of quantitative thresholds.

____3. The calculation of proforma earnings typically involves a departure from generally accepted accounting principles.

____4. The Securities and Exchange Commission provides recommendations to investors regarding which companies represent the safest investments.

____5. Adoption of a principles-based accounting standard setting system in the United Statescould make it more difficult for financial statement preparers and auditors to defend themselves in lawsuits related to financial statements.

____6.. Managers subject to an earnings-based bonus plan typically manage earnings downward if the reported earnings are substantially in excess of the maximum bonus level.

____7. Company earnings are considered to be of higher quality when management chooses accounting measurement rules that recognize revenues sooner rather than later, but that delay the recognition of expenses.

____8. Most managers of publicly traded companies prefer an earnings trend line that rises very steeply.

____9. The Financial Accounting Standards Board currently has no rules governing the recognition of large restructuring charges.

____10. A company with a large number of diverse operating units is well suited to earnings management.