Earnings management is
A)when management makes changes in the operations of the firm to ensure that earnings do not increase or decrease too rapidly.
B)when management makes changes in the operations of the firm to ensure that earnings do not increase too rapidly.
C)when management makes changes in the operations of the firm to ensure that earnings do not decrease too rapidly.
D)the practice of using flexible accounting rules to improve the apparent profitability of the firm.
E)none of the above.

Question

Quizplus · Accepted Answer

Earnings management refers to the practice of using flexible accounting rules to improve the apparent profitability of the firm. This involves manipulating the financial statements to show higher earnings or lower expenses than what would have been reported without such manipulation. The goal of earnings management is to influence the perception of investors, analysts, and the public about the financial health of the company.

Earnings Management Is