Accounting has a long history of being an ethical profession. In recent years, however, some companies have asked their accountants to help "manage earnings."
What does it mean to manage earnings?
Who is more likely to be involved in such a situation, the financial accountant or the management accountant? Why?
Do you believe that managing earnings is ethical? Discuss the rationale for your answer.
The major role of financial reporting is to effectively communicate financial information to outsiders in a timely and credible manner. To do so, managers are given opportunities to exercise judgment in financial reporting. Managers can use their knowledge about the business to improve the effectiveness of financial statements as a means of communicating with potential investors and creditors. However, earnings management is also likely to occur when managers have incentives to mislead their financial statement users by exercising discretion over accounting choices in......
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Approximate Word Count: 562
Approximate Pages: 3 (260 words per double-spaced page) |