Which of the following may indicate a company is manipulating earnings by creating a cookie jar reserve?

Question

Quizplus · Accepted Answer

A cookie jar reserve is an accounting technique that creates a reserve, or accumulation of profits, during good times in order to use it to offset poorer performance in future years. A higher than usual estimated warranty liability at yearend could indicate a cookie jar reserve because a company may overestimate their warranty liability in order to create a reserve and then reverse the excess estimate in future years.

Which of the Following May Indicate a Company Is Manipulating