Question

1. Explain the earnings management continuum
2. Briefly discuss the motivating factors for earnings management
3. Briefly explain the five accounting hocus-pocus widely used to make numbers, based on the speech delivered at the NYU Center for Law and Business by SEC Chairman Arthur Levitt

Answer 1

Financial statements are prepared using accounting techniques in revenue management. As can be seen from the highly positive attitude towards the company’s business activities and financial position. Many accounting rules and accounting principles need to be followed to make the right decision by following the principles of management of a company.

Earnings management is the process by which management handles possibilities and Financial statements to represent what should happen during this period rather than what actually happens. Management's earnings include both internal and external pressures.

Accountants, auditors, financial analysts, investors are important in revenue management. Financial contributors to such diverse interests Statements will explore revenue management methods.

Earnings are the net income or profit of a company for a given period of time. Earnings management is used to reduce business revenue fluctuations. Excessive fluctuations in income and expenses can be part of a company's operations.

The change in accounting policy should be explained to the reader in the financial statements and this is usually given in the footnote of the financial statement. This needs to be disclosed due to the accounting principle of consistency. If the company is using the same accounting policy every year, the financial statements are consistent. This is because the financial statements allow the user to easily distinguish when looking at the company's history. Therefore, every change in this policy needs to be brought to the notice of the financial report readers.