Earnings Management Is

question 443

Multiple Choice

Earnings management is

• A)the process of managing a business.
• B)the process of profit maximization.
• C)always fraudulent.
• D)manipulating income to meet a targeted earnings level.
• Reporting Financial Performance 4 - 9

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Definitions:

Gross Method

An accounting method for recording purchases at the full invoice price without deducting any cash discounts.

Credit Terms

Conditions under which credit is extended by a lender to a borrower, including repayment schedule, interest rate, and due dates.

Gross Profit

The financial gain obtained by subtracting the cost of goods sold from the revenue generated from sales, excluding operating expenses.

Sales Discounts

Reductions in the price of goods or services offered by a seller to a buyer to encourage prompt payment.