Deal of The Day! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: SAVE25
Welcome to Pass4Success

- Free Preparation Discussions
Mail Us support@pass4success.com
Location US
Mob_nav_barsMENU

ACFE CFE-Financial-Transactions-and-Fraud-Schemes Exam - Topic 2 Question 118 Discussion

Depreciation is especially applicable when companies try to overvalue their assets and net worth; the lower their depreciation expense, the higher the company's profits.
A) True
B) False

ACFE CFE-Financial-Transactions-and-Fraud-Schemes Exam - Topic 2 Question 118 Discussion

Actual exam question for ACFE's CFE-Financial-Transactions-and-Fraud-Schemes exam
Question #: 118
Topic #: 2
[All CFE-Financial-Transactions-and-Fraud-Schemes Questions]

Depreciation is especially applicable when companies try to overvalue their assets and net worth; the lower their depreciation expense, the higher the company's profits.

Show Suggested Answer Hide Answer
Suggested Answer: A

by Evelynn at Nov 01, 2025, 07:56 PM

Limited Time Offer

25%

Off

Get Premium CFE-Financial-Transactions-and-Fraud-Schemes Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

0/2000 characters
Submit Cancel
Alysa
4 months ago
True, companies might inflate profits this way.
upvoted 0 times
...
Ellsworth
4 months ago
True, but it can mislead investors.
upvoted 0 times
...
Rebecka
4 months ago
I disagree, it's B) False. Depreciation reflects asset value.
upvoted 0 times
...
Denny
4 months ago
Not sure if that’s the whole picture, though.
upvoted 0 times
...
Honey
4 months ago
Lower depreciation means higher profits, makes sense.
upvoted 0 times
...
Ardella
5 months ago
Surprised to see this, thought depreciation was a good thing!
upvoted 0 times
...
Gearldine
5 months ago
I disagree, it’s just accounting practice.
upvoted 0 times
...
Mattie
5 months ago
Ah, the age-old debate of depreciation vs. overvaluation. Fascinating!
upvoted 0 times
...
Annelle
5 months ago
False, depreciation is a legitimate accounting practice.
upvoted 0 times
...
Tashia
5 months ago
I vaguely recall that companies can manipulate depreciation methods, which could affect profits. But I’m torn on whether this statement is true or false.
upvoted 0 times
...
Buddy
5 months ago
True, depreciation can inflate profits.
upvoted 0 times
...
Tiera
6 months ago
I think it's A) True. Lower depreciation means higher profits.
upvoted 0 times
...
Cammy
6 months ago
True, that's how they cook the books!
upvoted 0 times
...
Richelle
6 months ago
Depreciation is the bane of my existence.
upvoted 0 times
...
Stevie
6 months ago
I feel like this statement is misleading. Depreciation is an expense that reduces taxable income, so I think it might actually be false.
upvoted 0 times
...
Geoffrey
6 months ago
I think we covered a similar question in class about how depreciation impacts financial statements. If depreciation is lower, profits might look better, but I’m not confident about the wording here.
upvoted 0 times
...
Edmond
7 months ago
I remember discussing how depreciation affects asset valuation, but I'm not sure if it directly relates to profit levels like this question suggests.
upvoted 0 times
...
Precious
7 months ago
Ugh, I hate questions about accounting principles. This feels like it's testing some subtle nuance that I'm just not grasping. I'm going to have to guess on this one - I'll go with B) False, but I'm not super confident.
upvoted 0 times
...
Elfriede
7 months ago
Okay, I've got a strategy for this. Depreciation is meant to match the expense of an asset's use with the revenue it generates. If a company tries to understate depreciation, that would inflate their profits, which seems like the definition of overvaluing their assets. I'm going with B) False.
upvoted 0 times
...
Na
7 months ago
Hmm, I'm a little unsure about this one. I know depreciation is important for accurately representing a company's financial position, but I'm not totally clear on how it relates to overvaluing assets. I'll have to think this through carefully.
upvoted 0 times
...
Lang
7 months ago
I think this is a pretty straightforward question. Depreciation is used to account for the loss in value of assets over time, so a lower depreciation expense would make profits appear higher. I'll go with B) False.
upvoted 0 times
Dana
2 months ago
Exactly! B) False makes more sense.
upvoted 0 times
...
Aleisha
2 months ago
But isn't it misleading?
upvoted 0 times
...
Merlyn
3 months ago
I think it's A) True. Lower depreciation does inflate profits.
upvoted 0 times
...
Rebecka
3 months ago
True, but I see your point.
upvoted 0 times
...
Shawna
4 months ago
I agree, it's definitely B) False.
upvoted 0 times
...
...

Save Cancel