Which of the Following Best Defines the Term Earnings Management

question 16

Multiple Choice

Which of the following best defines the term earnings management?

• A) It is the intervention by the management in the internal financial reporting process, with the intent of boosting the earnings of an organization.
• B) It is the purposeful intervention in the external financial reporting process, with the intent of obtaining some private gain.
• C) It is the legitimate alteration of internal reports by the management to influence contractual outcomes that depend on reported accounting numbers.
• D) It is a systematic management of earnings of an organization by its external shareholders, with the intent of increasing future profits.

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Definitions:

Periosteum

Except for the joint areas, the bones are enveloped by a dense connective tissue layer that contains many blood vessels.

Trabeculae

The network of fine, bony spicules within the structure of certain bones, such as the spongy part of bone, that adds structural support while minimizing weight.

Medullary Cavity

Large, marrow-filled cavity in the diaphysis of a long bone.

Endosteum

A thin vascular membrane lining the inner surface of the bony tissue that forms the medullary cavity of long bones.