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Disadvantages of earnings management

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Reference no: EM13488913

How would the use of 'cash accounting' rather than 'accrual accounting' reduce 'earnings management'? If over the life of a business, Cash Flows from Operations will equal Profits, why is it considered necessary to make adjustments (period end adjustments or adjusting entries) at the end of each accounting period? Explain why the advantages of 'accrual accounting' outweigh the disadvantages of 'earnings management'.

Reference no: EM13488913

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