"Earnings Management" Involves Deliberate Actions Taken by Management to Meet

question 29

Multiple Choice

"Earnings management" involves deliberate actions taken by management to meet earnings objectives. "Profit smoothing" is:

• A) an acceptable accounting policy, just like earnings management.
• B) the reverse of earnings management.
• C) a form of earnings management aimed at reducing periodic fluctuations in earnings.
• D) an acceptable accounting policy, unlike earnings management.

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Definitions:

End-Of-Period Spreadsheet

A financial report used to compile and summarize the accounting information at the end of an accounting period, including balances for assets, liabilities, and equity.

Income Statement Columns

Divisions in the income statement document that categorize and display revenues, expenses, and profit or loss data.

Net Income

A company's profit margin post the deduction of all expenses and taxation from the total revenue.

Net Loss

The result when a company's expenses exceed its revenues during a specific period, indicating a negative income.