An article published in Accounting Horizons describes various techniques that companies use to manage their earnings.

In your library or from some other source, locate the article “How Are Earnings Managed? Evidence from Auditors” in Accounting Horizons, 2003 (Supplement) and answer the following questions:
1. What are the four most common revenue-recognition abuses identified by auditors in that article? From the examples provided in the article, briefly explain each abuse.
2. What is the revenue-recognition abuse identified in the article related to the percentage-of-completion method?
3. Did revenue-recognition abuses tend to increase or decrease net income in the year they occurred?
4. Did auditors tend to require their clients to make adjustments that reduced the revenue-recognition abuses they detected?

  • CreatedJune 24, 2013
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