User Account

All Pages

Why a company might want to overstate its earnings

Assignment Help Accounting Basics
Reference no: EM133101784

Question - Some people are tempted to make their finances look worse to get college financial aid. Companies sometimes also manage their financial numbers in order to accomplish certain goals. Earnings management is the planned timing of revenues, expenses, gains, and losses to smooth out bumps in net income. In managing earnings, companies' actions vary from being within the range of ethical activity to being both unethical and illegal attempts to mislead investors and creditors.

Provide responses to the following questions.

a) Discuss whether you think each of the following actions (adapted from the FinAid website) to increase the chances of receiving financial aid is ethical.

1. Spend down the student's assets and income first, before spending parents' assets and income.

2. Accelerate necessary expenses to reduce available cash. For example, if you need a new car, buy it before applying for financial aid.

3. State that a truly financially dependent child is independent.

4. Have a parent take an unpaid leave of absence for long enough to get below the "threshold" level of income.

b) What are some reasons why a company might want to overstate its earnings?

c) What are some reasons why a company might want to understate its earnings?

d) Under what circumstances might an otherwise ethical person decide to illegally overstate or understate earnings?

Reference no: EM133101784

Questions Cloud

Address environmental damage : We've all grown up with varying degrees of "save the planet" rules, regulations, and suggestions. Natural resources have been used, abused, and depleted through
Determine the cost of renting the vehicle and cost per mile : Question - Sarah Leo rented an economy care for 5 days for $22.93 per day with unlimited mileage. Determine the cost of renting the vehicle and cost per mile
What are lead and lag indicators : What are lead and lag indicators and how are both concepts utilized in a quality program to develop measurement systems. How can the use of lead and lag indicat
Why are aspects of our culture more popular : Why are aspects of our culture more popular than others?
Why a company might want to overstate its earnings : State that a truly financially dependent child is independent. What are some reasons why a company might want to overstate its earnings
Adopting a new technology : When adopting a new technology, what specific problems were you or your employer trying to resolve?
Identify the three communication processes : (a) Identify the three communication processes used in Bounce Fitness. Briefly explain the procedures for each identified process.
Hbr blue ocean strategy : Use the bold subheadings to segment your narrative demonstrating a strong command of the reading.
Calculate the south african income tax liability : Calculate the South African income tax liability of Malik for the 2019 year of assessment. Note: You should indicate by the use of zero (0)

Reviews

Write a Review

Accounting Basics Questions & Answers

  Prepare cost of goods sold statement from the information

The information relating to cost department of ALPHA& OMEGA Corporation is as follows. Prepare Cost of Goods Sold Statement from the abovein formation.

  Amount of sales to receive bonus

The president of Jackson Corporation will not receive a bonus next year unless the company's profits are at least $435,000. Jackson sells a single product at a price of $27 per unit. If variable costs are $12 per unit and fixed costs total $150,00..

  Dons game store sells computer and other electronic games

dons game store sells computer and other electronic games. the store has budgeted sales for january as indicated in the

  Compute the contribution margin

A company has revenues of $500,000, fixed manufacturing costs of $100,000, and fixed administrative costs of $70,000. The contribution margin is

  Intercept inc estimated that for 2009 761250 of overhead

intercept inc. estimated that. for 2009 761250 of overhead costs would be incurred at 175000 machine hours. during 2009

  What the modified accrual and accrual bases of accounting

What the modified accrual and accrual bases of accounting. Record each of the following transactions on the cash basis, the modified accrual basis

  Suppose the land sinks into the sea as a result of an

the financial condition of greyco inc. is expressed in the following accounting equationassets

  Describe a floating versus fixed interest rate swap

Describe a floating versus fixed interest rate swap between firms Hi and Lo in which Lo also makes a "side payment" of 45 basis points to Firm L

  Describe the entry to adjust the accounts for interest

Which procedures describe the entry to adjust the accounts for interest accrued at the end of the accounting period for a note payable?

  Calculate the maximum allowable risk of incorrect acceptance

Calculate the maximum allowable risk of incorrect acceptance by the substantive tests of the detail transactions

  What is the total shareholders equity of Sunny Company

Dec. 31, 2019 - Profit of $830,000 and cash dividends paid amounting to $200,000. What is the total shareholders' equity of Sunny Company on December 31, 2019

  What is the net present value of expanding the production

Assuming a discount rate of 4%, what is the net present value of expanding the production of Product A and eliminating Product B

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd