A Version of Earnings Management That Became Common in the 1990s

question 115

Multiple Choice

A version of earnings management that became common in the 1990s was

• A)when management makes changes in the operations of the firm to ensure that earnings do not increase or decrease too rapidly.
• B)reporting "pro forma earnings".
• C)when management makes changes in the operations of the firm to ensure that earnings do not increase too rapidly.
• D)when management makes changes in the operations of the firm to ensure that earnings do not decrease too rapidly.
• E)none of the above.

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Definitions:

Business Owners

Individuals or entities that possess and operate a commercial enterprise, assuming the risks and rewards associated with the business.

Altering

The process of making changes or modifications, often referred to in the context of adjusting or tailoring clothes, but can also apply broadly to adjustments in plans or designs.

Building

The act or process of constructing structures such as houses, offices, and factories.

Service Businesses

Service businesses are companies that primarily earn revenue through providing intangible products and services rather than selling physical goods. Examples include consulting firms, restaurants, and cleaning services.