Question: PLEASE INCLUDE REFERENCES IN APA7 FORMAT. THANKS! Debt covenants are frequently included by lenders; however, the covenant may not specify the accounting methods a company

PLEASE INCLUDE REFERENCES IN APA7 FORMAT. THANKS!

Debt covenants are frequently included by lenders; however, the covenant may not specify the accounting methods a company must follow for the life of the loan. In order to avoid defaulting on a covenant, management may manage or manipulate earnings. Consider an accounting estimate and provide an example of how a company can manage or manipulate earnings to avoid a debt covenant default. As a reminder, some changes in estimate include, but are not limited to: bad debts, warranties, depreciation (changes in useful life, salvage value, or method), inventory obsolescence, etc.

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