Financial Accounting
3rd Edition
ISBN: 9780133791129
Author: Jane L. Reimers
Publisher: Pearson Higher Ed
expand_more
expand_more
format_list_bulleted
Question
Chapter 11, Problem 1MCQ
To determine
Identify the issue due to emphasis being laid on the earnings.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Which of the following best describes the potential impact of business risk on Earnings Quality?
Select one:
a. Business risk is mostly composed of financial risk factors and it has minimal effect on earnings quality.
b. Higher earnings quality is linked with companies more insulated from business risk. While business risk is not primarily a result of management’s discretionary actions, this risk can be lowered by skillful management strategies.'
c. A higher level of earnings quality can be observed in the industries with high business risk, because higher risk means higher returns
d. For managing business risk, the managers almost have no discretion, therefore business risk is not directly or indirectly related to earnings quality.
Which one of the following would be considered a financial cost of organizational control?
The cost of failing to recognize opportunities to increase sales due to data loss.
The cost of having financial statements audited by an independent accounting firm.
The cost of an upset customer who leaves the store because it took too long for a manager to approve a price adjustment for a
customer farther up in the line.
Managers are often faced with conditions that may cause earnings to be managed. There is a difference between managing income and manipulating earnings. Excluding the ethical and fraud issues associated with managing earnings:
Identify conditions that would lead an analysist to expect that management might attempt to manage earnings upward and,
Identify conditions that would lead an analysist to expect that management might attempt to manage earnings downward.
Chapter 11 Solutions
Financial Accounting
Ch. 11 - Describe why earnings is such an important number.Ch. 11 - Prob. 2YTCh. 11 - Prob. 3YTCh. 11 - Prob. 4YTCh. 11 - Prob. 5YTCh. 11 - Prob. 1QCh. 11 - Prob. 2QCh. 11 - Prob. 3QCh. 11 - Prob. 4QCh. 11 - Prob. 5Q
Ch. 11 - Prob. 6QCh. 11 - Prob. 7QCh. 11 - Prob. 8QCh. 11 - Prob. 9QCh. 11 - Prob. 10QCh. 11 - Prob. 11QCh. 11 - Prob. 12QCh. 11 - Prob. 13QCh. 11 - Prob. 1MCQCh. 11 - Prob. 2MCQCh. 11 - Prob. 3MCQCh. 11 - Prob. 4MCQCh. 11 - Prob. 5MCQCh. 11 - Prob. 1SECh. 11 - How do you think analysts evaluate the quality of...Ch. 11 - Prob. 3SECh. 11 - Prob. 4SECh. 11 - Prob. 5SECh. 11 - Prob. 6SECh. 11 - Prob. 7SECh. 11 - Prob. 8SECh. 11 - Prob. 9SECh. 11 - Prob. 10SECh. 11 - Prob. 11SECh. 11 - How does U.S. GAAP differ from IFRS in the way...Ch. 11 - Prob. 13SECh. 11 - Prob. 14ECh. 11 - Loder Company had a good year, and recorded a...Ch. 11 - Mismatch Company had a terrible year and will...Ch. 11 - Chip Company is making estimates of had debts and...Ch. 11 - Prob. 1IECh. 11 - Prob. 2IECh. 11 - Prob. 3IE
Knowledge Booster
Similar questions
- Which of the following statements regarding flaws suffered by financial measures is not correct?A)They are hard to quantify.B)They do little to motivate employees to improve accounting profits.C)They are not effective in getting managers' attention.D)They are useful in identifying operational problems.E)None of the above.arrow_forwardA financial manager’s goal of maximizing current or short-term earnings may not be appropriate because a. earnings are subjective; they can be defined in various ways such as accounting or economic earnings b. increased earnings may be accompanied by unacceptably higher levels of risk c. All of the choices d. it fails to consider the timing of the benefitsarrow_forwardThe concept of earnings quality has several dimensions, but two characteristics often dominate. The accounting information should be a fair representation of performance for the reporting period and, The information should provide relevant information to forecast expected future earnings. Provide a specific example of poor accounting quality that would hinder to forecasting of expected future earnings.arrow_forward
- Which of the following situations is most likely to pose a problem for companies that use return on investment as a measure of a manager’s performance? a. Managers may be encouraged to purchase more operating assets than they otherwise should. b. Managers may be discouraged from purchasing operating assets that could improve overall profitability. c. Managers may be discouraged from reducing their division’s costs. d. Managers may be discouraged from paying off debt in order to reduce costsarrow_forwardWhich of the following statements most likely describes a situation that would motivate amanager to issue low-quality fi nancial reports?A . Th e manager’s compensation is tied to stock price performance.B . Th e manager has increased the market share of products signifi cantly.C . Th e manager has brought the company’s profi tability to a level higher thancompetitors.arrow_forwardHow does subjective accounting policies at General Electric assist in hiding poor decision-making results on the Income Statement and Balance Sheet?arrow_forward
- What is one of the ways that accounting is used to direct and control the manager of a corporation? a.Threatening to tell shareholders a mangers income if a manager makes a ‘poor financial’ decision. b.Linking of a mangers performance to a bonus that depends on accounting profit. c.Making decisions based on the accounting information regardless of managerial input. d.Using income smoothing to assure a manager that they can invest in a low risk investment.arrow_forwardState whether the following statements are true or false. 8) Trade-Off between Risk-Return is the main principle to maximize the firm value. 9) Reduce inventory and use the proceeds to pay off a part of current liabilities will lead to increasethe quick ratio. 10) Unethical Behavior of the manager includes using the information that not available to the publicto make money.arrow_forwardCriticisms of return on investment as the only performancemeasure include:a. ROI focuses on short-term decisions.b. ROI is focused on only one component of the value chain.c. Managers evaluated based only on ROI are sometimesmotivated not to make an investment that is in the bestinterest of the organization as a whole.d. All of the above.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage LearningPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub