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

Required: 

In your library, on the Internet, 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. What effect did these revenue-recognition abuses tend to have on net income in the year they occurred? Indicate “increase” or “decrease” and the percentage of the time they had that effect. 

4. Did auditors tend to require their clients to make adjustments that reduced the revenue-recognition abuses they detected? Indicate “yes” or “no” and the percentage of the time auditors required adjustment.