A company decides to meet its profit target for the year by selling a piece of land, for a gain, in December, even though it believes it could have made significantly more money by waiting two months to sell the land. This is an example of
A) Accruals management
B) Expectations management
C) Fraud
D) Real earnings management

Question

Quizplus · Accepted Answer

This is an example of real earnings management because the company has made a deliberate decision to sacrifice long-term gains for short-term gains, in order to meet its profit target for the year.

A Company Decides to Meet Its Profit Target for the Year