Determining core income is an important first step to estimating permanent income. Explain. What adjustments to net income should be made for estimating core income?
Answer to relevant QuestionsExplain how accounting principles can, in certain cases, create differences between financial statement information and economic reality.Describe the three basic valuation approaches for estimating fair values. Relate the valuation approaches to hierarchy of inputs.Would you be willing to pay more or less for a stock, on average, when the accounting information provided to you about the firm is unaudited? Explain.What factors and incentives motivate companies (management) to engage in earnings management? What are the implications of these incentives for financial statement analysis?Define and cite an example of a value irrelevant component of income.
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