What practice can lead to overstating assets within financial statements?

Overstating assets within financial statements can occur when an organization fails to mark investments to market during a market decline. Marking to market means adjusting the value of an asset to reflect its current market value rather than its historical cost. When the market value of investments falls, not adjusting these values on the balance sheet can lead to a significant overstatement of assets. This practice gives a misleading representation of the company's financial health, as it suggests a more favorable position than actually exists.

The other options may involve accounting practices, but they do not specifically lead to the direct overstatement of asset values in the way that failing to mark investments to market does. For instance, while manipulating vendor invoices can influence expenses or liabilities, it doesn't inherently affect the asset side of the balance sheet in the same direct manner. Neglecting to record expenses might inflate net income but does not directly cause an overstatement of assets. Similarly, recording the present value of future cash flows involves estimates and future projections which, if not assessed properly, could lead to inaccuracies, but the immediate impact wouldn't be an overstatement of currently reported assets. Thus, the accurate and most relevant practice that directly contributes to overstated assets is the failure to mark investments to market.