Which of the Following Would Most Strongly Suggest That an Organization

Multiple Choice

Which of the following would most strongly suggest that an organization is engaged in dishonest income smoothing?

A) An organization has an employee bonus scheme that pays higher wages when higher profits are earned, thus increasing employee expenses.
B) An organization selling copper had benefited significantly from an increase in world copper prices. To match revenues and expenses it increases its depreciation rates of fixed assets by a proportional amount.
C) In order to expand their business, an organization has started selling a new type of inventory. This has been successful, but they have also increased their provision for warrantees to a higher level than in previous years.
D) All of the above strongly indicate dishonest income smoothing.