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Worksheetsbus421 ch11
Total questions: 12
Worksheet time: 6mins
Which of the following is a pattern of earning management?
Take a shower
Take a break
Take a bath
Take a picture
Which of the following are the factors that motivate earnings management?
Meet analysts' earning forecast
Avoid reporting loss
Protect company's reputation
All of the above
None of the above
The accrued expense account would ____ and lower the future earning.
Accrue
Reverse
Accumulate
None of above
When you adjust this year's earning as similar as last year's, which pattern of earning management have you used?
Income smoothing
Income maximization
Income minimization
take a bath
Which is the reason investor believe pro forma earning is better than GAAP earning?
Limited attention
Overreaction
Conservative
Motivated reasoning
How market response to bad earning management?
ERC increase
ERC decrease
ERC stay constant
which of the following option about IAS 37 is true when recording a provision?
When recording a provision, it must be at market value.
Uncertainty is the only reason justify the provision.
The provision is probable
The provision can only be recorded if it is incapable to estimate.
Earnings management for debt covenant purposes follows from which of the following theory we learned?
Opportunism
Efficient Contracting
Positive Accounting
Normative Accounting
In the article, “Determinants of Earnings Management Ethics Among Accountants” by Rafik Elias, it was determined that individuals high in idealism will view earnings management more leniently while individuals high in relativism will view earnings management more harshly.
True
False
Firms will only incur monetary cost when they fail to meet debt covenant.
True
False
All of the following are findings of the study, “Meeting or Beating Analyst Expectations in the Post-Scandals World”, except?
Stock market became less enamored of firms who meet/beat analysts’ expectations.
Shift in the mix of methods managers use to meet or beat analysts’ expectations.
Pressure to meet analyst forecasts has been completely eliminated due to increased use of expectations management.
Meeting/beating expectations has become a stronger signal of potential FCF.
Expectation management is more costly than earnings management and that is why managers were obsessed with earnings management before the scandals.
True
False
