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Perhaps the simplest way to manage earnings is to control the expense spigot. Even the most lean company can find discretionary expenses that can be trimmed to help meet the earnings target for a period.

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Q: What is the simplest form of earnings management?
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Related questions

What is the difference between fraud and earnings management?

Both involve the intent, by reporting management, to distort their company's earnings picture, but fraudulent accounting does so by violating generally accepted accounting standards (GAAP) while earnings management does so within GAAP.


How can a change of accounting standards affect earnings management?

Earnings management occurs when those making decisions select among the allowable alternatives of a particular generally accepted accounting standard the one that will result in earnings that meet the predetermined number.


What are the two components of the earnings allocation model?

Risk Management and Investment. =]


What should accompany the income statement of a company using earnings management?

An income statement, enhanced by earnings management without adequate disclosure, may well be a fraudulent income statement.


Is earnings after taxes considered the same as sales in finance management?

Absolutely not


What is the main motivations for companies to engage in earnings management?

Mainly to: 1.0 Ensure that the revenue stream is consistant with the cost structure, and so ensure that the company remains profitable 2.0 Analysis of the earnings will allow for the timeous implementation of plans, if the earnings fall 3.0 Earnings management also allows the company to check ratios such as price/earnings etc, so as to ensure investor interest in the company's shares


When the numerator and demominator have 1 as their only common factor a fraction is in what?

Simplest form


What is three over seven in simplest form?

3/7 is in its simplest form.


What are the models for earning management?

The earnings depends on what buisness you are working for and what you are modeling. If by earnings management models you are referring to earnings management research that has evolved with positive accounting theory, then it is important to note many models exists. Positive accounting theory (PAT) centers on the economic consequences of accounting choices. The broad stroke of the theory states that managers may be influenced to manipulate earnings away from "true earnings". In the effort to further expand PAT, researchers have approached the detection of earnings management in 2 general ways. The first way is to examine the income values of filing firms to determine whether they are zero or slightly less than zero. Theoretically, the expectation is that income should have a smooth distribution, however, Burgstahler and Dichev noted an "earnings kink" around zero. Another way to examine earnings management is by examining the 'level' of abnormal accruals believed to present in the income values--an example of some of these models include the Jones and modified Jones model.


Why did Arthur Burns say that companies use earnings management?

The management people running those companies try to meet the analysts' earnings projections to (i) maintain their credibility with the analyst community, and (ii) maintain the relative price of the company's stock.


What is the full form of CAMELS in banking and finance?

C - Capital Adequecy Ratio A - Asset quality M - Management and effectiveness E - Earnings and profitability L - Liquidity S- Syatem and controls


What is the simplest form for 1 over 4?

1/4 is in its simplest form.