Question

1. Differentiate between earnings management and fraud.

Answer 1

Earning management and fraud differences-

A. Earning management is the management of the earning of the individual or a company in order to reduce the liability of the taxes where as fraud will be leading to hiding of the income in order to avoid the taxes

B. Earning management is legal activity, whereas fraud is illegal activity.

C. Earning management is advocated for financial literacy whereas fraud is legal offence.

D. Earning management is related to Tax planning whereas fraud is related to tax evasion

E. Learning management is promoted by the government itself where as fraud is never promoted by the government and it is an offence

F. there is a limitation to which earning can be managed whereas there is no limitation to the fraud.