Earnings Management Explain the Concept of Earnings Management. Why Is It of It

question 8

Essay

Earnings management
Explain the concept of earnings management. Why is it of concern to investors and financial statement users? Do you think this practice should be allowed?

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Definitions:

Non-current Asset

Long-term investments or properties that a company holds and are not expected to be converted into cash within a year.

Current Liability

A financial obligation that is due to be settled within one year or within the normal operating cycle, whichever is longer.

Bank Indebtedness

A financial term referring to the amount of debt a company has borrowed from banking institutions.

Highly Liquid

Assets that can be easily and quickly converted into cash without significant loss in value.