Asked by Ciara Lawrence on Jun 03, 2024
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Management tends to make accounting changes and to manipulate discretionary accruals that increase income in order to avoid violating debt covenants.
Accounting Changes
Adjustments made to the accounting methods, estimates, or reporting entities of a firm, which must be disclosed to stakeholders to ensure transparency.
Discretionary Accruals
Accounting adjustments made by management's judgment, often to smooth out earnings or manipulate financial statements.
Increase Income
A financial objective focused on enhancing the amount of earnings generated by an individual or entity.
- Understand the consequence of executive approaches on financial reporting and market prices of shares.
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Learning Objectives
- Understand the consequence of executive approaches on financial reporting and market prices of shares.
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