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Give Some Examples of How Manufacturing Companies Can Manipulate Earnings

question 122

Essay

Give some examples of how manufacturing companies can manipulate earnings through its production process. What should an auditor or financial statement user do to detect this type of manipulation?


Definitions:

Spontaneous Recovery

Spontaneous recovery is the reappearance of a conditioned response after a pause or period of apparent extinction.

Observational Learning

The process of learning behaviors by watching and imitating others.

Sexual Arousal

A physiological and psychological state of being awakened to sexual desire, often characterized by increased blood flow to the genitals, elevated heart rate, and, in many cases, a desire for sexual activity.

Conditioned Response

A learned response to a previously neutral stimulus that has become associated with an unconditioned stimulus.

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