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.

---

Definitions:

Consumer Purchase Tests

Evaluations conducted with potential customers to assess their reaction to a product before it is launched widely in the market.

Sales Tests

Controlled experiments or trials in specific market areas to estimate or predict the sales potential of a product.

Consumer-Oriented Sales Promotions

Sales tools used to support a company’s advertising and personal selling directed to ultimate consumers. Also called consumer promotions.

Advertising

The process of drawing awareness to offerings, necessities, and so forth, through paid adverts from a recognized sponsor.