Management tends to make accounting changes and to manipulate discretionary accruals that increase income in order to avoid violating debt covenants.

Question

Quizplus · Accepted Answer

This is a common practice known as earnings management and is often done by management to avoid breaching debt covenants or to meet earnings targets. However, such practices can be unethical and can mislead investors and stakeholders.

Management Tends to Make Accounting Changes and to Manipulate Discretionary