One Definition of Earnings Management Is That It Occurs When

question 73

Multiple Choice

One definition of earnings management is that it occurs when managers use:

• A) judgment in financial reporting to alter financial reports to mislead stakeholder.
• B) an accounting method that is inconsistent with other industry members.
• C) more conservative accounting estimates than other companies.
• D) pro forma accounting results as opposed to GAAP results.

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Definitions:

Capital Lease

A lease treated as an acquisition of an asset and the incurrence of an obligation on the lessee's balance sheet, indicating a purchase and financing arrangement.

Lease Liability

An obligation representing the present value of future lease payments under a non-cancellable lease.

Operating Lease

A lease agreement that allows for the use of an asset but does not transfer ownership of the asset to the lessee, often with shorter terms.

Lease Asset

An asset that is subject to a lease agreement, where the lessee has the right to use the asset for the lease term.