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Evaluate the effectiveness of the cookie jar accounting

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Question - Accounting theory - practice - Earnings management is made possible by the fact that the true net income does not exist. Furthermore, GAAP does not completely constrain the manager's choices of accounting policies and procedures.

In light of the above statement, answer the following questions:

(a) Give reasons why managers would resort to extreme earnings management tactics.

(b) Evaluate the effectiveness of stuffing the channels as an earnings management device.

(c) Evaluate the effectiveness of the cookie jar accounting as an earnings management device, giving examples of practices in recent years.

Reference no: EM133067361

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