What Does a Company Hope to Achieve by Manipulating Earnings

question 58

Multiple Choice

What does a company hope to achieve by manipulating earnings?

• A) meet debt covenant restrictions
• B) artificially inflate share prices
• C) meet analysts' forecasts or benchmarks such as prior-year earnings
• D) all of the above

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Definitions:

Full Strict Scrutiny

A legal standard requiring the government to prove that a law or policy is necessary to achieve a compelling state interest and is narrowly tailored to achieve that interest.

Compelling Government Purpose

A legal concept referring to a reason the government may use to justify the imposition of restrictions that might otherwise infringe on individual rights, provided it is necessary for a significant public goal.

Separation of Powers

A foundational principle of governance where the state's responsibilities are divided among different branches, typically the legislative, executive, and judicial branches, to prevent the concentration of power.

Federal Courts

Courts established by the federal government of a country, with the authority to hear disputes that fall under federal law or involve parties from different states.