The possibility that the capital markets' focus on periodic profits may tempt a company's management to bend or even break accounting rules to inflate reported net income is an example of:
A)An ethical dilemma.
B)An accounting theory issue.
C)A technical accounting issue.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

This scenario presents a conflict between a company's obligation to report accurate financial information and its desire to meet or exceed market expectations for profits. This ethical dilemma may lead management to compromise on accounting principles in order to manipulate reported earnings.

The Possibility That the Capital Markets' Focus on Periodic Profits