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:

Liabilities

Debts or financial responsibilities that a company has towards others, requiring settlement via the transfer of economic resources over a period.

Debits

Entries in accounting that represent an increase in assets or expenses, or a decrease in liabilities, equity, or income.

Credits

Accounting entries that increase liabilities or equity or decrease assets or expenses.

Journal Entries

The recording of financial transactions into a company's accounting records, documenting the details of financial transactions that affect the financial statements.