Earnings management through strategic matching is best exemplified by
A) changing the useful life of a depreciable asset.
B) timing transactions such that large one-time gains and losses occur in the same quarter.
C) changing the interest rate used in accounting for leases without describing the change in the notes to the financial statements.
D) capitalizing as assets expenditures that have no future economic benefit.

Question

Quizplus · Accepted Answer

Earnings management through strategic matching involves timing transactions to match large one-time gains and losses in the same quarter. This allows companies to smooth out earnings and avoid volatility, making it difficult for stakeholders to assess the true financial performance of the company. Choices A, C, and D all involve misrepresenting financial information, but they do not necessarily involve strategic matching.

Earnings Management Through Strategic Matching Is Best Exemplified by