If a manager selects an accounting policy to ensure that the company does not violate the debt-to-equity ratio requirement of its bank loan, which of the following would be their objective of financial reporting?

Question

Quizplus · Accepted Answer

Choosing an accounting policy to avoid violating loan covenants by affecting the debt-to-equity ratio aligns with earnings management, as it involves making financial decisions to influence perceived company performance.

If a Manager Selects an Accounting Policy to Ensure That