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dear tutor
I don’t understand the pubished answer, how there is a management bia? the total revenue current year is reduced comparing PY, only one segment revenue is increased. there is no sign of increased revenue or creative accounting. so how the conclusion comes out?
Many thanks
It’s not a conclusion – it doesn’t say there is management bias – the answers identifies factors that could be indicators of the possibility of bias.
For example – two salespersons each earn a commission of 5% on sales. One is told that if he achieves a target level of sales his commission will be increased to 10%. Who is most likely to overstate sales? Answer – the one who is incentivised to overstate states.
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