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    Question

    Which of the following is not likely to be a motivation to overreport earnings?

    A To reduce tax liability Correct Answer Incorrect Answer
    B To remain in compliance with bond agreement conditions (covenants) Correct Answer Incorrect Answer
    C To meet the requirements of a financial analyst Correct Answer Incorrect Answer
    D To adhere to some coverage ratios requirements Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    To reduce tax liability is a motivation to underreport earnings. Others are situations where there will be a motivation to overreport earnings.

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