Which of the Following Is NOT McKee's Explanation of "Earnings

question 19

Multiple Choice

Which of the following is NOT McKee's explanation of "earnings management"?

• A)A smooth net income by choice does not reflect what investors and creditors need or want to know since it masks true performance.
• B)It creates a more stable and predictable earnings stream by smoothing net income.
• C)It is a reasonable and legal management decision making and reporting intended to achieve stable and predictable financial results.
• D)Earnings management reflects a conscious choice by management to smooth earnings over time and it does not include devices designed to "cook the books."

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Definitions:

Path Analysis

A statistical technique used to describe the directed dependencies among a set of variables, often visualized through a diagram.

SEM

Stands for Standard Error of the Mean, a statistical measurement that estimates the accuracy with which a sample mean represents the population mean.

Factor Analysis

A statistical technique designed to discover the fundamental factors or elements that account for the observed correlation patterns among a collection of variables.

Eta Analysis

A statistical method for measuring the association between qualitative and quantitative variables.