The Following Is a Definition of Earnings Management

question 9

Essay

The following is a definition of earnings management:
"Earnings management is recognized as attempts by management to influence or manipulate reported earnings by using specific accounting methods (or changing methods), recognizing one-time non-recurring items, deferring or accelerating expense or revenue transactions, or using other methods designed to influence short-term earnings." Explain what is meant by this statement in the context of the discussion in the chapter.
[This statement comes from an excellent article on the issue titled "Earnings Management and its Implications." You may want to discuss parts of the article with your students. The article can be found at: http://www.nysscpa.org/cpajournal/2007/807/essentials/p64.htm]

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Definitions:

Effective Behavior

Actions or conduct that result in the achievement of desired outcomes, goals, or objectives.

Voluntary Tasks

Activities chosen freely without coercion, often reflecting personal commitment or interest.

Impression Management

The process through which individuals attempt to control the perceptions or impressions others form of them, often to appear more favorable or competent.

Self-promotion

The act of highlighting one’s own skills, achievements, or qualities to advance personal or professional interests.