Question

Which of the following points were raised by Dechow and Skinner in characterizing earnings management? (Check all that apply.)

a) Manipulation of accruals
b) Income smoothing
c) Earnings quality
d) Aggressive revenue recognition

Answer 1

Dechow and Skinner raised points about manipulation of accruals, income smoothing, and earnings quality in characterizing earnings management.

Step-by-step explanation:

Dechow and Skinner highlighted several points in characterizing earnings management, including:

1. Manipulation of accruals: This involves adjusting accounting entries related to revenues, expenses, assets, and liabilities to manipulate reported earnings.
2. Income smoothing: It refers to the practice of reducing fluctuations in reported earnings over time by manipulating accounting methods.
3. Earnings quality: This refers to the overall reliability and transparency of reported earnings, including their accuracy and relevance in reflecting a company's financial performance.

These are some of the key points raised by Dechow and Skinner in their characterization of earnings management.