activities need judgment in preparing the accounting earnings
Chapter4: Ethical Responsibilities Of Accountants
Section4.8: Dell Inc.
Problem 1Q
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Reported accounting earnings provide valuable information to investors, lenders and regulators. Reported income is also important for executive bonus. Yet, within the structure of GAAP, managers can use judgment in computing accounting earnings and in structuring transactions. In other words, managers can engage in earnings management.
- What activities need judgment in preparing the accounting earnings?
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