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

Required:

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?