Management's routine use of non-fraudulent accounting and economic discretion to smooth earnings is called:

Question

Quizplus · Accepted Answer

Management's routine use of non-fraudulent accounting and economic discretion to smooth earnings is called earnings management. This involves adjusting accounting practices to influence the presentation of financial statements in such a way as to produce predictable future reporting results. This approach does not necessarily involve fraudulent activity or violate accounting standards, but it can be viewed negatively if used inappropriately to manipulate investors or hide unfavorable financial results. The purpose of earnings management may be to make the company look more attractive to investors, improve stock prices, or meet earnings expectations.

Management's Routine Use of Non-Fraudulent Accounting and Economic Discretion to Smooth