1 What Is Meant by the Term Earnings Management

question 32

Essay

1. What is meant by the term Earnings Management?
2. Why has the focus on earnings management increased in recent years?
3. What incentives might there be for companies to engage in earnings management?

Recognize the financial reporting implications of retiring bonds early.

Compute and understand the significance of the amortization of bond premium or discount using both the effective-interest and straight-line methods.

Identify the critical components and calculations involved in bond transactions and their presentation in financial statements.

Understand the primary sources and types of water pollutants.

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Definitions:

Indirect Method

A technique used in cash flow statements to adjust net income for non-cash transactions and changes in working capital.

Income Statement

A financial report showing a company's revenues, expenses, and profit over a specific period.

Cash Dividends

Payments made by a corporation to its shareholders out of the company's profits.

Dividends Payable

A liability representing an amount owed by a company to its shareholders as a distribution of the company's earnings.