Which of the Following Is NOT a Motivation to Manage

question 21

Multiple Choice

Which of the following is NOT a motivation to manage earnings?

• A) Companies try to meet or beat Wall Street earnings projections in order to grow market capitalization and increase the value of stock options
• B) Companies try to accelerate as much revenue as possible into early periods regardless of the effects on later periods
• C) To smooth net income over time
• D) To maximize compensation including bonuses

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Definitions:

Indirect Materials

Materials used in the production process that are not directly traceable to individual products, such as lubricants and cleaning supplies.

Specific Production

A manufacturing or production process tailored to produce specific, customized products for individual customers' requirements.

Process Costing System

An accounting system used to calculate the cost of producing products in industries where the production process is continuous.

Process Costing System

An accounting method used where goods are produced in a continuous process, costs are averaged over all units to calculate unit costs.