Which of the following are used to smooth out earnings?
A) Cookie jar reserves
B) Expectations gap
C) Spring-loading
D) All of the above

Question

Quizplus · Accepted Answer

Cookie jar reserves are used to smooth out earnings by creating a reserve of money that can be used in the future to boost earnings during periods of lower profits. Expectations gap refers to the difference between actual earnings and expected earnings, which can also be used to manipulate earnings perception. Spring-loading refers to the practice of initiating a stock option plan shortly before announcing positive news that will likely increase the stock price, which can also smooth out earnings by boosting profits in a certain period.

Which of the Following Are Used to Smooth Out Earnings