Earnings Management Hw

Earnings Management Hw
1. What is earnings management? The companies use earnings management as a strategy by which
they can easily control and manipulate their earnings to reach their pre–determined earning target. 2.
Why do companies employ earnings management techniques? Accountants cannot predict every
business structure, every new and innovative transaction. Therefore, they build up principles that
allow for flexibility so that they can adapt to changing circumstances. However, people make use of
that flexibility. They employ earnings management techniques to shade financial unpredictability.
Thus, the real results of the decisions of the management are veiled. 3. Describe 5 popular
techniques used by companies that Levitt believes are illusions. ... Show more content on
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Secondly, he suggests that the accounting profession should qualify what is acceptable or not for the
auditors. Third, Levitt suggests SEC to focus more on the materiality problem and to search for the
materiality frauds more because according to him materiality requires consideration of all relevant
factors that could impact an investor's decision. Fourth, he said that SEC staff should consider
interpretive accounting guidance on the do's and don'ts of revenue recognition for example by
publishing standards like for the software industry to other service companies. Fifth, Levitt suggests
the private sector to take action where current standards and guidance are inadequate. According to
him, the FASB's projects, which are now in progress, will bring greater clarity to the definition of a
liability. Sixth, he says that the SEC's review and enforcement teams will continue to root out and
aggressively act on abuses of the financial reporting process. Lastly, he suggested the Public
Oversight Board to form a group of all the major constituencies to review the way audits are
performed and assess the impact of recent trends on the public interest. 5. What concerns does Levitt
have with regard to the auditing process? What
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Earnings Quality Assessment
Abstract A quality of earning assessment is a tool used by analyst to determine the correlation
between accounting income and economic income. The techniques to analyze accounting income
and economic income include: comparing accounting principles, reviewing changes in accounting
principles, analyzing discretionary and warranty expenditures, understanding replacement cost of
assets and managements and auditors opinion of the company. A quality of earnings assessment of
PepsiCo is applied to the various techniques to analyze accounting income and economic income.
Discuss Measures That may be used to asses the quality of a firms reported earnings. Companies
prepare their financial statements based on accounting income, which does ... Show more content on
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F. To determine if a company has future uncertainties such as a lawsuit, there should be a review of
notes to the financial statements. According to Schroeder, Clark, and Cathey (2009), "review the
notes to financial statements to determine if loss contingencies exist that may reduce future earnings
and cash flows" (p. 158). G. To increase sales a company may relax their credit polices "review the
relationship between sales and receivables to determine if receivables are increasing more rapidly
than sales" (Schroeder, Clark, &Cathey, 2009, p. 158). H. Auditor's opinion of a company and
managements discussion is an indication of the company ability to continue as a going concern.
According to Schroeder, Clark, &Cathey (2009), "review the management discussion and analysis
section of the annual report and the auditor's opinion to determine management's opinion of the
company's future to identify any major accounting issues" (p. 158). Obtain an annual report for a
large corporation and perform a quality of earnings Pepsi revenue recognition policy was compared
to their competitor Coke to determine if Pepsi uses an accounting method that would inflate their
earnings. Pepsi states, "we recognize revenue upon shipment or delivery to our customers based on
written sales terms that do not allow for a right of return" (p. 73). Pepsi revenue recognition method
is similar to Coke. Coke states, "we recognize

The Year's Annual Earnings
As the company 's fiscal year comes to a close, I am pleased to announce this year 's annual
earnings. After another amazing year, Edge of Your Seat Entertainment reported a 9% gain in its
film production segment. This increase was attributed to our expanding relationship in association
with Focus Films, Lions Gate and After Dark Films in the launching of our latest blockbuster film
"Don 't Turn off the Light!" Theatrical revenue generated from its October release grossed $36
Million domestically in its first 6 week run. This was also in conjunction with a 4% growth in TV
viewership per Nielsen 's reported rankings after successfully airing original programming such as
"What Lies Beneath New York" and "The Thing that Lives in the Closet" ... Show more content on
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Together, as a company, we jumped started our creative juices by developing new and innovative
ideas which placed us as a leading trendsetter within the film and entertainment industry. Revenue
from the 1st and 2nd Quarter grossed $42.5 million by mid–year, and grew to $89 million by 3rd
Quarter respectively. We finished strong in the 4th Quarter with net earnings amounting to $105
million due to combined revenue from box–office sales, the release of both television shows, and
Direct to video sales. A tremendous improvement in comparison to last year's annual earnings which
generated $213.3 million. Overall Edge of Your Seats Entertainment amassed an increase in net
earnings by 10% a growth of $23.2 million for 2014. By focusing our energy into creating film and
shows that our audiences wish to see versus competitor entertainment such as Bender Spink,
Blumhouse and Dark Castle Entertainment we are relentlessly striving to transform into a media
trendsetter. In Forbes magazine 's November issue, The top ten Media and Entertainment companies
to watch for in 2014, Forbes declared "Edge of Your Seat Entertainment films are electrifying, and
are successfully rewriting the rules in which breakthrough programming is delivered." They just
maybe the film industry's best kept secret of 2014!"
A big

Accounting For Earning Per Share
ACCOUNTING FOR EARNING PER SHARE (AASB 133) PARA 66 ISSUE: IF EPS PROVIDE
MEANINGFUL AND VALUABLE COMPARISON BETWEEN ENTITIES IN REPORTING
PERIOD SIGNIFICANCE: earning per share is extraordinarily important for the investors who
interested to invest in the company. These shareholders pay close attention to the market price of per
share and are also want to know about the net income of the organization on per share basis so that
they can make comparison. EPS is a standard measure of a firm's net income that is available for the
company's shareholders. A company with high EPS ration is able to distribute high dividend for its
investors. If an investor wants to earn steady income he can simply review company's history of
EPS or can see how ... Show more content on Helpwriting.net ...
HISTORY OF THE DEVELOPMENT OF ACCOUNTING THOUGHTS The accounting standard
AASB133 para 66 is mandatory to follow for all the companies. However discloser of diluted
Earnings per share (both including and excluding extra ordinary items) is not necessary to measure
in to work out for small and medium size organizations. However these companies can be motivated
to make these disclosure as defined in the notifications. It is necessary to show these disclosure on
the pace of consolidated financial statement. The Australian accounting standard board make
accounting standard AASB 133 earnings per share under section 334 of the corporation act2001 on
15th July 2004. This is comprised version of AASB135 applies to annual reporting period beginning
on or after January 2018. It incorporate relevant amendment contained in other AASB standard
made by the AASB up to and including 21 January 2015. (According to method compilation details
in the act). The IASB and FASB have begun working together on an EPS project as part of their
convergence efforts and board had issued exposure draft in august 2008 the project objective is to
simplify the requirements of AASB133 has certain amendment till the date. Para 1.1 had been
amended and says that standard applies to each entity that is require to prepare consolidated
financial statement in accordance with part 2m.3 of the

Project Earnings Essay
Project Earnings Manipulation: An Ethics Case Based on Agency Theory
ABSTRACT: The impact of accounting information on ethical behavior has been extensively
documented. Additionally, agency theory is a widely accepted behavioral perspective. Despite this,
there is an absence of instructional material in the accounting education literature that ties ethical
issues to an agency–theory context. The primary objective of this case is to highlight control system
ethical issues using an agency–theory context. Students explore their own reactions to a prohibited
but unmonitored cost allocation action. Thus, this case is positioned to fill this void in any
accounting course that covers agency theory or management control systems.
S
ue ... Show more content on Helpwriting.net ...
Each project was unique, depending on specific water conditions as well as local environmental,
sociopolitical, and economic issues. Too frequently for the Group Vice President (VP), the unique
nature of each project had led to cost overruns, sometimes causing significant project losses. Senior
management looked very unfavorably on these substantial losses. Worse yet, the Group VP was
often surprised about these cost overruns, because the company had a very poor costinformation
system. Costs were only accumulated at the completion of construction, and only then did these
overruns get reported. To make matters worse, little detail was provided that could identify these
cost overruns in the cost reports. An expensive and lengthy search was required to obtain
information on which part(s) of the project has cost overruns. In short, top management had very
little information and was poorly informed about the operation of the Membrane group.
Consequently, the Group VP was reluctant to waste time on what was already "water under the
bridge," believing his time was better spent on current projects and preventing future overruns.
Much discussion had taken place about how to avoid these surprises, and, as a consequence, systems
analysts were scheduled to implement a better cost–tracking system. The new system could not be
applied to current projects, including K(3) and the two recently started projects, but all new projects

Retained Earnings
A
REPORT
ON
COMPARATIVE STUDY OF RETAINED EARNINGS
OF
LUPIN v/s WYETH
INTRODUCTION
Managing a company's operations, marketing and sales activities and expense management are but a
few of the decisions that management has to deal with. After it has made a profit the company will
then need to decide what to do with those profits. Among the options for using profits are:
operations, returning cash to shareholders, or keeping cash in reserve for future use
Retained earnings represent the amount a company has left after it has paid all its expenses, taxes,
and dividends. A company can return all the cash it has left after it has taken care of its obligations,
but that would handicap its efforts to expand operations, make ... Show more content on
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Should a net loss be greater than beginning retained earnings, retained earnings can become
negative, creating a deficit.
The retained earnings general ledger account is adjusted every time a journal entry is made to an
income or expense account
When a company generates a profit, management has one of two choices: They can either pay it out
to shareholders as a cash dividend, or retain the earnings and reinvest them in the business.
When the executives decide that earnings should be retained, they have to account for them on the
balance sheet under shareholder equity. This allows investors to see how much money has been put
into the business over the years. Once you learn to read the income statement, you can use the
retained earnings figure to make a decision on how wisely management is deploying and investing
the shareholders ' money. If you notice a company is plowing all of its earnings back into itself and
isn 't experiencing exceptionally high growth, you can be sure that the stock holders would be better
served if the board of directors declared a dividend.
Ultimately, the goal for any successful management is to create Re.1 in market value for every Re.1
of retained earnings.
Retained Earnings Examples from Real Companies
Let 's look at an example of retained earnings on the balance sheet: * Microsoft has retained $18.9

billion in earning over the years. It has over 2.5 times that amount in stockholder equity ($47.29
billion), no

Earning Management
Earning management is good or not?
Introdcution
This essay is to examine whether earning management is it good or bad. Though there is so many
debate about whether it should be accepted to be good rather than bad, however, this essay will
explain the both side of earnings management.
Earnings management reduces the quality of financial reporting, it can interfere with the resource
allocation in the economy and can bring adverse consequences to the financial market. This essay
analyses both, causes and motives of earnings management as well as possible remedies. Therefore,
it is not surprising that market participants, legislators, regulators, and academics are concerned with
the need to control financial reporting abuses.
The ... Show more content on Helpwriting.net ...
Therefore, it is reasonable to assume that earnings restatement firms can be characterized as firms
who knowingly and intentionally engaged in earnings manipulation.
Financial Reporting Perspective
Based on Hanna (1999) article in CA magazine review, important point to get across from this
article is that management is tempted to provide excessive unusual, non–recurring and extraordinary
charges, to put future earnings in the bank. Furthermore, these future earnings are buried in
operations. This makes it difficult for investors to diagnose the reasons for subsequent earnings
increases.
Investors and analysts look to core earnings, ignoring extraordinary and non–recurring items Implies
manager not penalized for non–core charges, such as write–downs, provisions for restructuring. But
current non–core charges increase core earnings in future years, through lower amortization and
absorption of future costs. As a result, managers tempted to ―overdose on non–core charges,
thereby putting earnings ―in the bank also called cookie jar accounting.
Conclusions
The concept of the earnings management is difficult to define and very subjective to decide. I
believe that earnings management not only due to violation of GAAP but also aggressively choose
GAAP method that are considered as earnings management. This broad definition may discourage
earnings management and benefit

What Are Peterson's Retained Earnings?
In the case response, Peterson has clearly answered each part of the question and provided
substantial backup for required questions. To add to the retained earnings portion of the shareholders
equity section; it can classified as appropriated or un–appropriated retained earnings. Appropriated
retained earnings comprise that portion of retained earnings that is not available to distribute as
dividends (Schroeder, Clark, & Cathey, 2014, p. 535). These restrictions develop when the Board of
Directors designate special uses for these funds. Lately, many large company's have been re–
purchasing their shares to improve to financial ratios or because they believe their company's share
prices under values the corporation. If a company chooses

Earning Response Coefficient
ERC Tanggal pengumuman atas laba (earning announcement) adalah tanggal peristiwa info
akuntansi masuk ke bursa (t=0) –> peristiwa pelepasan lewat public Kita mengukur reaksi pasar
sebelum dan sesudah tanggal pengumuman atas laba (event period after and event period before)
Sedangkan pengukuran perubahan harga di lakukan di seputar tanggal tersebut (window period) Di
dalam pasar, reaksi pasar terbagi menjadi 2, yaitu reaksi harga dan reaksi volume (volume return
yang diperdagangkan) Reaksi Harga terbagi menjadi CP dan return. Return sendiri terbagi menjadi
Actual Return (AR), Market Return, dan Abonormal Return. Abnormal Return ternagi lagi menjadi
Cummulative Abnormal Return (CAR) dan Acccumulative Abnormal Return (AAR). CP Reaksi ...
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Struktur Modal Dhaliwal et al (1991), Dhaliwal dan Reynold (1994) serta Billings (1999)
menunjukkan bahwa informativeness of earnings menurun sesuai dengan default risk. Dhaliwal dan
Reynald (1994) menggunakan dua proksi untuk default risk yaitu bond ratings dan debt–to–market
equity (debt/equity) ratio. Kedua proksi tersebut mencerminkan risiko–risiko yang relevan yang
tidak bisa dicerminkan oleh equity beta. Debt/equity ratio ini mencerminkan struktur modal yang
dimiliki perusahaan. Debt/equity ratio yang tinggi berarti perusahaan lebih banyak menggunakan
hutang sebagai modal. Untuk perusahaan–perusahaan yang memiliki lebih banyak hutang, setiap
peningkatan laba (sebelum bunga) akan dirasakan oleh pemberi pinjaman sebagai suatu keamanan.
Jadi peningkatan laba akan lebih banyak direspon oleh debtholder, bukan oleh shareholder. Oleh
karena itu, ERC perusahaan yang tinggi hutangnya akan lebih rendah (Dhaliwal et al 1991)
dibandingkan dengan perusahaan yang rendah hutangnya. Core dan Schrand (1999) juga
membuktikan bahwa reaksi harga saham terhadap laba yang tak terduga akan meningkat pada saat
perusahaan hampir menghadapi pelanggaran perjanjian hutang. Temuan mereka adalah ERC
merupakan fungsi meningkat dari modal, kebalikan dari tingkat hutang. Jadi terdapat hubungan
negatif antara tingkat hutang dan ERC. Relevansi Nilai pada Pasar yang Tidak Efisien Pengujian
relevansi nilai yang tidak mempertimbangkan

Educational Attainment And Earnings Analysis
2.9 Educational Attainment and Earnings From the point of view of the development economists,
education not only offers the opportunity to escape deprivation through improvements in
employment and earnings prospects but also has unproductive benefits such as improved health and
ability to function and Successfully integrate into the mainstream society, all factors that could
promote better education and labor market outcomes (Van der Berg, 2008: 7). The primary focus of
research by labor economists was therefore to determine how much the education level contributes
to employment probabilities and subsequent wages and how the level of education contributes to
such incomes. In its simplest form, human capital theory posits that an individual ... Show more
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However, as countries develop demand for specialized workers generally increases, and return to
higher education and tertiary education generally increase as well. Education is
11 not only instrumental in improving the well–being of the currently educated, but it also improves
the results of subsequent generations. South African Matriculator (those completing grade 12) who
have at least one parent who have matriculated also earn about twice their counterparts who do not
have a maternal parent (Van der Berg, 2007: 861). Parental education, possibly through the parent's
social networks or the transfer of a human capital variable cannot be observed, seems to have a
positive impact on their children's profits. For the most part, the benefits of education are set in
motion through the labor market. The best educated are more likely to be employed, they are
generally more productive and are rewarded with higher earnings when employed. Some
educational benefits, such as improved health, may also not be explicitly related to the labor market,
but could increase the pecuniary benefits associated with labor market participation. Although the
benefits of education are more pronounced for the children of educated parents, social mobility
upwards is also possible for the poor who invest in

Wage and Wage Earnings
Wage and Wage Earnings Research Process Introduction The general problem is that wage earnings
and wages are categorized differently. In order to understand the specific problem one has to
research various industries as well as look into what positions are being held, they have investigate
the number of years experience, and kook at the current ages is of individuals who are working.
With that said in order to provide research one has to understand what is meant by the research
process. Today's society understands the process of researching is asking question and searching for
answers. This paper will provide research pertaining to wage earners and wages. First, define the
purpose of the research and explain why researching wage earnings ... Show more content on
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The hypothesis helps the investigator to collect the right kind of data needed for the investigation.
Hypotheses are also important because they help an investigator to locate information needed to
resolve the research problem or sub problems (Leedy and Ormrod, 2001). In research, an
investigator is able to either support or reject a hypothesis. If a hypothesis is rejected, it will lead an
investigator to new hypothesis to explain the phenomenon in question. If a hypothesis is continually
supported, it may evolve into a theory (Leedy and Ormrod, 2001). Three possible outcomes that can
result from this: 1.) Research based on education and wages. 2.) There is a need for the industries
HR department to review their education policy. 3.) The industries will try to find other alternatives
not to pay higher wages to employees with various years of education behind them. According to the
data set, if we research by years of education, we will discover some differences for verse the
number of years of education workers have. Construction workers tend to have less education but
higher earnings. The same is said for professionals or executives but this group has both the
education and higher wages to obtain higher earnings. As we look closer into the research, we start
to understand that yes education plays a large factor but is not the sole ingredient in obtaining and
keeping higher wages. Experience,

Personal Statement For Earning An MBA
When professional peers are all on a level playing field, how do you differentiate yourself? My
military background showcases abundant roles of leadership and responsibility, however, companies
across the globe are now hiring Veterans more than ever. Any advantage my Army experience would
have leveraged could potentially be comparable to another Veteran applicant interviewing for the
role I want. Earning an MBA is the difference maker. I believe that the advanced education gained
with an MBA from the Whitman School of Management at Syracuse University will allow me to set
myself apart from the crowd and succeed in roles of greater responsibility.
My current position affords me the opportunity to work alongside high level executives ... Show
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I don't want to sacrifice education quality just because the courses are from an online program. The
reputation of an education from Syracuse University has removed any doubt from my mind.
Program courses such as Strategic Management and Project Management really caught my attention
as classes that will substantially add value to my current portfolio of skills. Learning how to develop
strategies to create and sustain competitive advantage is a concept that I know will allow me to grow
professionally and bring more value to my team at work. I believe that successfully graduating from
the Syracuse MBA program will increase my credibility among business leaders and offer a career
versatility not currently available to me. I have created a five year plan that guides my career path to
becoming the Director of Logistics followed by obtaining the role of Vice President of
Transportation within Preferred Materials, Inc.
In addition to the education, the friendships developed with classmates and the alumni network are
other advantages of an MBA. Fellow students in my program are making the effort to better
themselves the same way I am, and I am looking forward to growing with them and building
relationships. Meeting classmates in person through residencies or international immersion trips will
serve to reinforce the rapport built throughout the semester. We will be able

Corporate Earnings And Financial Statement
Earnings play a key role in providing critical information for investors. Most investment decisions
are made with reliance on performance forecasts reported by analysts. Company public earnings
announcements are important for financial statement users, as it directly affects their decision to
invest. This puts a lot of pressure on directors to try and meet or beat these forecasts. Earnings
management is the 'massaging' of earnings within the constraints of GAAP. Previous research
suggests that earnings management used by directors is becoming increasingly widespread. Lopez
and Rees (2002) discovered in their research that the market disproportionately reacts to firms that
beat or miss analysts' forecasts; with a high multiple being attached to firms that beat expectations.
Kasznik and McNichols (2002) show that firms that meet expectations also have greater future
earnings and stock prices than firms that fail to do so. The disproportionate reaction from the market
heavily affects share prices, and the resulting change in earnings per share often dictates director
performance along with their bonuses. With such incentives, it is naturally expected that directors
manage earnings to meet analysts' expectations. Directors have a range of methods that they can
adopt, which makes the identification and measurement of earnings management more complicated.
This essay splits the methods and reviews literature that has used different models to study earnings
management. 2.

Swan Davis Inc
Case 72 Swan–Davis, Inc. Bond and Stock Valuation Swan–Davis, Inc. (SDI) manufactures
equipment for sale to large contractors. The company was founded in 1976 by Tom Stone, the
current chairman, and it went public in 1980 at $1 per share. The stock currently sells for $15, Stone
owns 14 percent of the shares, and other officers and directors control another 13 percent. The
industry is cyclical, and competition is strong, so profits are some–what unstable. Tables 1, 2, and 3
provide historical balance sheets, income statements, and ratios for the company for the period
1994–1996, Table 4 provides industry average data for 1994–1996, and Table 5 provides one
security analyst's forecasted data for the company based on assumptions ... Show more content on
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It is agreed that in your explanation you will assume that corporations have a state–plus–federal
income tax rate of 40 percent, and you will use the top personal tax rate of 39.6 percent. c. SDI's
officers have been under pressure from the board of directors to do something to improve the price
of the common stock. Management is also concerned about the stock price personally because
bonuses are based on the performance of SDI's stock price relative to other firms in its industry. So,
they would like a detailed explanation of how the market price is determined–what do investors look
for, and what can management do to provide what investors want? Bob Wilkes also wants you to
explain how stock valuation information be used to help estimate the company's cost of equity. Tony
Biddle provided some information that can be used in the stock valuation process. First, as
background on what investors think about the company, here are some representative quotations
taken from analysts' reports issued during the past few years. August 1992. Ed Thompson, Smyth
Farley's construction analyst: "SDI's investment in new facilities is paying off in lower costs and
higher volumes, and its R&D and marketing programs are paying off in increased sales.
Management is confident that sales and earnings will set new records this year, and the CFO regards
an earnings growth

Earnings Per Share
The definition of Earnings per share is the portion of a company's profit allocated to each
outstanding share of common stock. Earnings per share serves as an indicator of a company's
profitability.
Calculated as:
When calculating, it is more accurate to use a weighted average number of shares outstanding over
the reporting term, because the number of shares outstanding can change over time. However, data
sources sometimes simplify the calculation by using the number of shares outstanding at the end of
the period.
Diluted EPS expands on basic EPS by including the shares of convertibles or warrants outstanding
in the outstanding shares number.
Earnings per share are generally considered to be the single most ... Show more content on
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In their new study, "Is diluted EPS Becoming More Art than Fact," Caster and Elson, along with
Leonard G Weld, investigate whether corporate managers' stock repurchase decisions are affected by
their incentives to manage diluted earnings per share. Managers have substantial discretion to time
their firm's stock repurchases, which increase diluted EPS. The authors sought to identify if and
when firms were repurchasing their own shares to manage diluted EPS, and whether employee stock
options played a role in these decisions. The issue is especially pertinent since repurchases are often
portrayed as being good for the company. However, the authors argue that repurchases for the
purpose of managing diluted EPS should have no real effect on firm value. The authors find that
managers increase the level of their firm's stock repurchases to offset the effects of securities such as
employee stock options, which can decrease diluted EPS. Numerous articles in the financial press
have suggested that managers repurchase shares to offset EPS dilution in response to employee
stock option plans, and executives acknowledge that their decisions to issue and repurchase shares
are influenced by potential earnings per share effects. The authors also find that managers increase
their firm's stock repurchases when earnings fall short of the level required to maintain the past

Ethics in Earnings Management Essays
A company's ultimate goal is to make money and remain a going concern. With that goal in mind,
management must continually report sustained or improved earnings to stakeholders to ensure
constant and new investments in the company's future (Geiger & van der Laan Smith, 2010). The
pressure to report positive results can lead management to engage in earnings management activities
to alter short–term results to meet the goals set forth (Geiger & van der Laan Smith, 2010). In
addition to the pressures on company management, broad accounting principles introduce ethical
issues into the accounting profession (Gibson, 2011). Merchant and Rockness (1994) suggested the
practice of earnings management introduces "the most important ethical ... Show more content on
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It also includes the generalizations determined from the study concerning earnings management. It
concludes with the long–run effects of short–term earnings management.
The accounting profession is often seen as being restricted by various rules and regulations,
standards presented by professional boards, and the passage of time. The accounting profession is
regulated by the Securities and Exchange Commission (SEC) (Gibson, 2011). Though much of the
regulation of the profession has been privatized at the direction of the SEC, it is under the regulation
of the SEC that Generally Accepted Accounting Principles (GAAP) are determined (Gibson, 2011).
Nevertheless, the profession is subject to substantial regulation with numerous rules, principles,
bulletins, and standards (Gibson, 2011). Regardless of the amount of regulation, the study (as cited
in Gibson, 2011) indicates the profession has not been fully restricted to a point where ethics and
precision are not open to interpretation by its members, especially with regard to earnings
management. Even with the enactment of the Sarbanes–Oxley Act of 2002 in response to several
cases of financial fraud which increased the regulation of the industry and the attention the
profession receives, the principles with which the professionals are given provide room for short
term results to be manipulated (Gibson, 2011). Within the framework provided under the SEC's
regulation, those within the profession must be

Questions On Financial Earnings Management
Prior studies (e.g., Burgstahler and Dichev 1997; Degeorge, Patel and Zeckhauser 1999) identify
three earnings thresholds managers seek to achieve when they report financial statements: avoiding
negative earnings, avoiding earnings declines, and avoiding negative earnings surprises. A large
number of studies use these three earnings thresholds to test earnings management in various
research settings. This dissertation investigates another potential earnings management threshold,
peer performance, which has been largely ignored in the extant literature.
Both Burgstahler and Dichev (1997) and Degeorge et al. (1999) explain threshold–driven earnings
management behavior by referring to the prospect theory (Kahneman and Tversky 1979), which
suggests that for a given increase in wealth, the corresponding increase in value is the greatest when
the increase in wealth moves from negative to positive territory relative to a reference point (viz.,
zero earnings, zero change in earnings or zero forecast error). While they do not specifically explain
the formulation of reference points or the usage of other reference points beyond those extensively
investigated three earnings thresholds, they imply the existence of other reference points
(Burgstahler and Dichev 1997), ). and They also suggest that if other reference points are used either
by corporate boards or investors, and if those reference points are reflected in the executives' reward
schedulesor compensation contracts, executives

Earnings Management
Is earnings management good or bad? Who (or which part of corporate governance mechanisms) is
responsible to constrain earnings management? To what extent can the auditor constrain earnings
management? Propose some methods for the auditors to detect and constrain earnings management.
Does market react to firm's earnings management behavior?
In order to discuss earnings management and what its affects are on business and whether or not it's
a good thing, one must first understand what earnings management really is. Earnings management
is often referred to as creative accounting or income smoothing. By definition, earnings
management is "strategies used by the management of a company to deliberately manipulate the
company's earnings so ... Show more content on Helpwriting.net ...
Lastly, company participates in good earnings management is because it provides a way to present
information to its present and potential investors about their operations. Actions such as these that
achieve stable and predictable results and positive earnings trends through good planning and
operational responsiveness are not illegal or unethical in any way, its just part of business. All
businesses try to reach their targets and try to continue seeing growth while responding to their
competition and changes in the market. Good earnings management just allows the company to
continue their operations with some type of goal to achieve or target to reach. This only becomes a
bad thing when those goals or targets are not reached and someone starts making up the numbers.
Overall, only improper or abusive earnings management is a bad technique. Managers and
companies should focus on the long–term value creation that benefits investors over the short–term
earnings management that satisfies financial analysts. Quarterly or periodically managing earnings
is a bad idea for many reasons. First, quarterly predictions narrowed down to a couple of cents per
share don't say much about the company's long–term prospects or ability to generate profits. Second,
as mentioned above, it's illegal to abusively manage earnings and if the company does get caught for
doing so, the actions of the company end up costing the

Earning Management
Does the Commercial Banking Industry of UAE Practice Earnings Management Dr. Mohammed
Obeidat Introduction It is the right of external users of accounting information to be provided with
more adequate information to protect their interests. Many questionable issues concerning the term
of earnings management are still available. Auditors, accountants, financial analysts, and other
concerned parties may hold the responsibility of detecting external users from the practices of
earnings management. Many questionable issues are still available regarding the term of earnings
management. Some people may have no enough idea about what practices are classified under
earnings management, and what practices can not be classified under this ... Show more content on
Helpwriting.net ...
This study depends on cross sectional data because a time series data will misstate the data, so it is
unique in its inputs of data. This paper is organized as follows: The first section defines earnings
management, and describes the incentives of its practices by commercial banks, in addition to that, it
explores the methods of practice and how these practices can be defected. The second section
explores the most related prior researches. The third section presents the hypotheses of the current
research. The fourth section describes the followed methodology in the current study. The fifth
section presents the results, while the fifth explores the findings. Literature Review and Prior
Researches Many people believe that the term of earnings management is understandable in its
simple form, but most of those unable to determine whether a selected practice is an earnings
management or not. Understanding what earnings management constitutes and why it takes place is
important for all users of accounting information. This study highlights the different aspects of
earnings management, so it identifies clearly this term, and presents the incentives standing behind
its practice. Moreover, the current study determines the methods of earnings management used by
firms, and explores how these practices can be detected. Earnings management is defined as the
"intentional misstatement of earnings leading to bottom line numbers that would have been different
in the absence

Earning Differences by Gender
Despite women outnumbering men in U.S. colleges and the implementation of legislation like the
1963 Equal Pay Act the pay differences persist. According to some the pay gap persists because:
Men are more likely to pursue college majors and advanced degrees in fields that lead to higher–
paying careers.
Women are getting graduate degrees, but not necessarily in fields that give the best salaries.
Discrimination remains a factor and it is difficult to document and measure.
Women on average are working fewer hours than men, often to care for children or other family
members.
The wage gap narrowed steadily through the 1980s and 1990s but the convergence slowed in the
early 2000s. In 1980, women earned 60.2 cents for every $1 men ... Show more content on
Helpwriting.net ...
The case given in the article is a prime explain of wage discrimination faced by females in the
workplace. Based on the details given in the article the female worker was suffered wage
discrimination. When compared to her male friend she was equally qualified but she was paid less
despite that fact. The employer got away with discriminating against the female worker mainly
because workers at her work place was forbidden. When she found out it had been four years. The
Ledbetter Fair Pay Restoration Act enacted in 2009 allows victims like her to file a pay
discrimination complaint against the employer within 180 days of their last pay check instead of the
previously law which required victims to file the discrimination pay compliant within 180 days of
receiving their first unfair paycheck.
Opinion
According to the United States Census Bureau, the changes in the real median earnings of men and
women who worked full time, year– round between 2011 and 2012 were not statistically significant
and the female–to–male earnings ratio has not experienced a statistically significant annual increase
since 2007. So this clearly indicates that legislation enacted by lawmakers so far have failed to
eliminate the wage gap problem that currently exists between males and females.
According to U.S. Equal Employment

Earnings And Profit Essay
Earnings and profit are related, but not exactly the same. They are different in the terms of how they
are calculated. Earnings and profit calculations are often used to determine the financial health of a
business. They are typically used in reporting business income to tax authorities as well. New
business owners usually make mistakes, they want to see the large number of sales on financial
statements, if the number of sales is high they think they operate good, but they should actually look
at how much they are profiting.
Earnings are the single most studied number in a company's financial statement because they show a
company's profitability. Earnings are the income a business earns, which can be calculated after
subtracting the costs of making, purchasing, or providing the items or services it ... Show more
Any profit that is gained goes to the business's owners, who may or may not decide to spend it on
the business. A company may have an impressive amount of earnings but have very little profit. It is
calculated: Profit = Total Revenue – Total Expenses
Profit before tax (PBT) is a profitability measure that looks at a company's profits before the
company has to pay corporate income tax. This measure deducts all expenses from revenue
including interest expenses and operating expenses, but it leaves out the payment of tax. Profit
before tax provides investment analysts with useful information for evaluating a company's
operating performance without tax implications. PBT exists because tax expense is constantly
changing and taking it out helps to give an investor a good idea of changes in a company's profits or
earnings from year to year.
For example, the income statement of company XYZ looks like:
Sales revenue $

Earning A College Degree Essay
Acquiring a college degree is such an essential step in life that it has turned into a central part of the
"American Dream". Earning a college degree, land a position, purchase a house, raise a family. It
may not generally be that basic, but rather everything begins when you start for a college degree.
Acquiring a college degree is all about bringing opportunities into your life. It prepares you, both for
mentally and socially, for your career and in your personal life too. When you get a college degree,
there are more opportunities for getting a new job. For most people, the ability to earn money is the
most important things. College degree is the shortcut to get success. Studies have shown that college
graduates earn more money than people who don't earn college degrees. Earning higher money
depends on the degree. For example, if you do a master's degree, than you would make more money
than those people doing bachelor's degree.
Employment Benefits is one the most important reason for getting a college degree. This can include
health care, retirement plans and other many important things. Earning a college degree will provide
stability for your families and people will be happier as they have more money. In today's economy,
employment ... Show more content on Helpwriting.net ...
A college degree likewise has an extremely positive effect on an individual's composed and verbal
relational abilities. Of all the advantages given by earning a college degree, this is the most
profitable. Communication abilities will impact pretty much every part of your life. The capacity to
communicate obviously, succinctly, and powerfully will help you get the ideal employment, enhance
your professional success opportunities and upgrade your interpersonal associations with family
members and relatives. Thus, this all proves that benefits of college outweigh its

Figure Out Weather Earnings Management Is Fraud
Summary
The objective of this research paper is to figure out weather earnings management is fraud.
I included some information of earnings management first. Earnings management is managers'
accounting choices. Managers may use different accounting techniques to create some opportunities
within the boundary of GAAP, so that they can make financial statements look better. I stated the top
5 techniques of earnings management and relevant examples:
The big Bath
Cookie jar reserves
Revenue recognition
Immaterial
Capitalization practice
Secondly, in order to figure out the relationship between fraud and earnings management, I find
some definition of fraud. It is an intentional conduct and materially mislead financial statements,
which also violate criminal and civil law.
Finally, after understanding the definition of fraud and earnings management, I found that earnings
management and fraud are similar. They all intent to distort financial statement. If we abuse earnings
management, it is easy to fall into fraud. Earnings management is a good point for us to analyze
fraud more, but it is still not a fraud because managers manage earnings within the boundaries of
GAAP. Introduction
The most important role of financial reports is to effectively communicate financial information to
outsiders in a timely and credible manner (FASB, 1984). Earnings are vital in financial statements
because earnings represent the company's value. Investors and creditors always look to

College Earnings: A Case Study
Mena 5hundreds of thousands of dollars in a lifetime compared to those with only a high school
diploma,which translates to 73% more earnings. (Value of a College Degree, 2). Figure 2 is a
reflection ofthe average annual earnings for high school graduates, those with a bachelor's degree,
and agraduate degree. Evidently, those who completed a higher education earn more.Figure 2.
Average Annual Earnings in 2010 by Occupation and Education. Oreopoulos,Philip, and Uros
Petronijevic. "Making College Worth It." Future of Children, vol. 23, no. 1,2013, pp. 41–65.
Eric.ed.gov, Institute of Education Sciences.In the graph of Figure 3, there is a comparison between
the annual earnings of percentilestaken from a survey completed in 2011, which again demonstrates
that individuals who onlycomplete their education up until high school earn ... Show more content
on Helpwriting.net ...
Annual Earnings Percentiles in 2011 by Education. Oreopoulos, Philip, andUros Petronijevic.
"Making College Worth It." Future of Children, vol. 23, no. 1, 2013, pp. 41–65. Eric.ed.gov,
Institute of Education Sciences.In the United States, most minority and low–income students who
perform high in highschool fail to attend college or to succeed once enrolled. (Elliott, Change, 26)
This is a matter ofeconomic status, however, there are numerous programs that offer financial aid,
loans, grants,and even scholarships. Students are able to know if they are eligible for financial aid
throughprograms such as FAFSA and NASFAA. Some of the requirements to obtain financial help
arevery simple; these include having a high school diploma or GED, maintaining a
satisfactoryacademic progress, and having a valid Social Security Number. Today, with the help of
financialaid packages, it is rare for middle–class families to pay the whole price of tuition
(CollegeTuition Costs, 2). The process, unknown to students, can be complex and might require
patience,but the effort pays off. Aware of the cause, President Obama launched the American

ACC 557 Week 7 Chapter 11 E11 7 E11 13
WEEK 7
NOTE: REFER TO THE SCREENSHOT ON HOW TO FILL IN. ALSO TO VIEW WHAT IS IN
THE ANSWER BOX CLICK ON THE BOX
EXERCISE 11–7
Mar. 2 Organization Expense 38,000 Common Stock (5,000 X $1) 5,000 Paid–in Capital in Excess
of Par –Common Stock 33,000
June 12 Cash 475,000 Common Stock (60,000 X $1) 60,000 Paid–in Capital in Excess of Par –
Common Stock 415,000
July 11 Cash (1,000 X $110) 110,000 Preferred Stock (1,000 X $100) 100,000 Paid–in Capital in
Excess of Par Value–Preferred Stock (1,000 X $10) 10,000
Nov. 28 Treasury Stock 18,000 Cash 18,000
Top of Form
Exercise 11–7
Your answer is correct.
Fallow Co. had the following transactions during the current ... Show more content on
Helpwriting.net ...
ALSO TO VIEW WHAT IS IN THE ANSWER BOX CLICK ON THE BOX
(a) Feb. 1 Cash 120,000 Common Stock (25,000 X $1) 25,000 Paid–in Capital in Excess of Stated
Value–Common Stock ($120,000 – $25,000) 95,000
Apr. 14 Cash 46,000 Paid–in Capital from Treasury Stock ($46,000 – $22,500) 23,500 Treasury
Stock (9,000 X $2.50) 22,500
Sept. 3 Patents 42,000 Common Stock (7,000 X $1) 7,000 Paid–in Capital in Excess of Stated
Value–Common Stock ($42,000 – $7,000) 35,000

Nov. 10 Treasury Stock 6,000 Cash 6,000
Dec. 31 Income Summary 452,000 Retained Earnings 452,000
(b)
Preferred Stock
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
Balance

400,000
Common Stock
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
Feb. 1
Sept. 3
Balance

J5

J5
25,000 7,000
1,000,000
1,025,000
1,032,000
PROBLEM 11–3A (Continued)
Paid–in Capital in Excess of Par–Preferred Stock
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
Balance

100,000
Paid–in Capital in Excess of Stated Value–Common Stock
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
Feb. 1
Sept. 3

Balance

J5
J5
95,000 35,000
1,450,000
1,545,000
1,580,000
Paid–in Capital from Treasury Stock
Date
Explanation
Ref.
Debit
Credit
Balance
Apr. 14

Summary: Forecasting Profitability and Earnings
Summary of Forecasting Profitability and Earnings
In the competitive environment, there is a strong prediction in economic theory that profitability is
mean reversion both within and across industries. For instance, under competition, firms will leave
relatively profitless industries and turn into relatively high profitable industries. Some companies
introduce new products and technologies that bring more profitability for an entrepreneur.
Otherwise, the expectation of failure which makes companies with low profitability motivations to
distribute capital to more productive uses.
Mean reversion represents that changes in earnings and profitability is predictable to a certain
extent. However, predictable variation in profitability and ... Show more content on Helpwriting.net
...
Lagged changes in the profitability are equal to Yt/At minus Yt21/At21. DFEt is equal to Yt/At
minus E(Yt/At). Table one indicates that when there are some lagged changes in profitability, CPt, is
exclusive used to explain CPt11, and slope of CPt is forcefully negative; commonly, the changes in
profitability of the companies from t to t+1 back up 30 percent of lagged change. But for average
reversion which leads slope of CPt close to 0. Therefore, there is little as well as statistically
dependable negative autocorrelation in the change in profitability. Our evaluation of average
reversion rate of the profitability is 38 percent per year.
In conclusion, differences in risk bring differences in the expected profitability of a firm.
Furthermore, Yt/At is the noisy agent for the true economic profitability. Finally, differences in the
expected profitability of a firm can be the results of the monopoly rents. If we suppose all
companies revert toward an overall balance level of profitability, then:
[pic]
Section II is the model to use for nonlinear average reversion. We expand the model as:
[pic]
Table one shows that there is nonlinearity in autocorrelation of changes in expected profitability. It
is similar to that studied by Brooks and Buck–master (1976) as well as Elgers and Lo (1994) about
the changes in

The Value Of A Company's Earning And Profitability
QUESTION 1: RELATIVE PROFITABILITY
There are several ways to measure a company's earning and profitability. Return on Equity ("ROE")
and Return on Assets ("ROA") are, historically, among the most widely used measures to assess
relative profitability in the banking industry. The technique used in this paper is based on Dr. Cole's
ROE Model. This model helps "demystify" ROE and ROA; and focuses and analyzes the main
factors that are driving profitability for a bank. For this paper, selected financial data for East West
Bank ("EWB" or the "Bank") and its Peer Group ("peers") was obtained from the December 31,
2013 Uniform Bank Performance Report ("UBPR") and various EWB documents ; and from
interviews conducted with EWB management . ... Show more content on Helpwriting.net ...
Thus, EWB's Equity Multiplier ("EM") is also higher than peers (10.09x vs. 8.88x).
EWB's higher ROE compared to peers highlights a higher rate of return on shareholder's equity;
nonetheless, it does not provide the complete picture in itself. Decomposing the ROE to better
understand the reason for change, it was determined that 42% of EWB's 2013 ROE was due to
leverage, i.e., lower relative equity.
Since ROA growth itself will not yield important insights, nine variables have been identified,
reflecting variances (Bank vs. Peer) for each in Exhibit 1. The following four key drivers out of the
nine have been examined below, to provide a more detailed picture:
1. PROFIT STRENGTHS (HIGHEST POSITIVE VARIANCE)
A. YIELD ON EARNING ASSET ("EA")
Over the past 3 years, EWB's yield on EA has decreased 66 bps from 2011 to 2013 (Exhibit 2). This
is essentially owing to the "low interest rate environment" and the lower average yield on non–
covered loans . EWB's average yield is above peers (Exhibit 1), as EWB used funds more
efficiently; placing a larger proportion of EA (82.47% vs. 68.63%) in higher yielding assets (i.e.,
Gross Loans and Fed Funds Sold & Resales); as illustrated in Exhibit 3. EWB's higher yield on
gross loans was attributable to the interest income from the "covered loans" portfolio, which is due
to the additional accretion accounted for under ASC 310–30. As the covered loan balance continues
to decrease, the overall yield will

Earning Management
Does the Commercial Banking Industry of UAE Practice Earnings Management Dr. Mohammed
Obeidat Introduction It is the right of external users of accounting information to be provided with
more adequate information to protect their interests. Many questionable issues concerning the term
of earnings management are still available. Auditors, accountants, financial analysts, and other
concerned parties may hold the responsibility of detecting external users from the practices of
earnings management. Many questionable issues are still available regarding the term of earnings
management. Some people may have no enough idea about what practices are classified under
earnings management, and what practices can not be classified under this term. ... Show more
Moreover, activating sales during the last month of the accounting period through granting discounts
to customers is also in agreement with the GAAP, and is not a violation to the accounting standards.
There are different incentives to managements of firms to practice the phenomenon of earnings
management. Most of these incentives are related to benchmarks of earnings. Sometimes, the
previous period's performance may be the benchmark to the firm. In other cases, the benchmark to
the firm may be the expectations of financial analysts. The promised compensations to the firm's
management may be the most important incentive of the practice of earnings management.
Benchmarks are necessary for the determination whether the management deserves or does not
deserve the promised compensation. Sometimes, the desire of the firm's management to increase the
stock market price may also be one among the incentives to earnings management, especially, when
the management is looking for more compensation. The normal positive relation between earnings
and stock market price means that as the amount of announced earnings increases, the common
stock market price is also increases. Therefore, when a desire exists to the firm's management to
affect the common stock market price, the management will manage its earnings. Reducing the
amount of income tax may also be one among the incentives of practicing earnings management. In
many countries, business

Financial Statements Paper
Abstract
In this paper I will identify the four basic financial statements, discuss how they are interrelated with
each other, and why they are useful to managers, investors, creditors, and employees.
BALANCE SHEET
A balance sheet provides detailed information about a company's assets, liabilities and shareholders'
equity.
Assets are things that a company owns that have value. This usually means they can either be sold or
used by the company to make products or provide services that can be sold. Assets include physical
property, such as plants, trucks, equipment and inventory. Assets also include things that can't be
touched but nonetheless exist and have value, such as trademarks and patents. Cash itself is an asset,
as well as ... Show more content on Helpwriting.net ...
Small business owners use these statements to find out what areas of their business are over budget
or under budget. Specific items that are causing unexpected expenditures can be pinpointed, such as
phone, fax, mail, or supply expenses. Income statements can also track dramatic increases in product
returns or cost of goods sold as a percentage of sales. They also can be used to determine income tax
liability.
Income statements, along with balance sheets, are the most basic elements required by potential
lenders, such as banks, investors, and vendors. They will use the financial reporting contained
therein to determine credit limits.
STATEMENT OF OWNERS' EQUITY (STATEMENT OF RETAINED EARNINGS)
Retained earnings appear on the balance sheet and most commonly are influenced by income and
dividends. The Statement of Retained Earnings therefore uses information from the Income
Statement and provides information to the Balance Sheet.
The Statement of Retained Earnings is a summary of the changes that occurred in the owner's equity
during a specific time period, such as a month or a year. Increases to owner's equity arise from
investments by the owner and from net income earned during the period. Decreases result from
owner withdrawals and from a net loss for the period. Net income or net losses come directly from
the income statement, and owner investments are capital transactions between the business

The Practices Of Earnings Management
From my point of view, I believe that the different practices of earnings management are misleading
to the stakeholders, and it aims at increasing or decreasing the reported earnings based on the
executive decisions and what would serve their position in the market.
This drives us to ask who the users of the company's financial statements are. Those are the parties
that rely on financial statements for decision making. And they are summarized in the following
groups: Employees, Customers, Supplies, Creditors, Shareholders, Financial analysts, Stock
underwriters and Regulators.
Why earnings management may occur
We have to views that justify why earnings management may occur. The first view states that the
managers who carry out the earnings ... Show more content on Helpwriting.net ...
Yet, if something is legal (since GAAP permits many accounting choices) and is profitable for the
company, then some people might assume it is ethical. While on the other hand, I believe that when
carrying out a business decision it should be taken into considerations all its ethical aspects in
addition to its profitability and legibility aspects.
Thus, in my opinion earnings management does not meet the ethical requirements of an executive
job. To ensure that the executives or managers performance and decisions are in line with
professional ethics, we must see whether their decision implementations would have negative effect
on others. And in this case it is clearly affecting financial statement users.
How earnings management might affect the firm itself?
Earnings management is not effective on the short term as it will not increase the firm's profits, they
may even worsen the enterprises operating difficulties if the executive decisions were not efficient
or if they were not accurate in their expectations and anticipation of the future earnings.
The earnings management opportunities might affect the firm future performance because the
executive would be willing to sacrifice future cash flows for current period income.
It may lead to damage the interests of shareholders and to lose their trust and confidence in

The Detection Of Earning Manipulation
Professor Messod Beneish created the Beneish M–score Model in 1999 in his research entitled The
Detection of Earning Manipulation. He identified that earnings management is important for
financial statement users to assess current economic performance, to predict future profitability, and
to determine firm value (Jansen et al, 2012)
Beneish tested 74 companies and all COMPUSTAT firms matched by two–digit SIC for period of
1982–1992 and he use 8 variables model in the mathematical model.
The evidence indicates that probability of manipulation increases with:
1. Unusual increases in receivables
2. Deteriorating gross margins
3. Decreasing asset quality (as defined later)
4. Sales growth
5. Increasing accruals
The M–score ... Show more content on Helpwriting.net ...
Figure four illustrates four main steps that can be used to detect fraud or earning manipulation in the
company's financial data.
Figure 4 Beniesh Model main four steps
2.2.5 Benford's Law definition
At the end of the nineteenth century Simon Newcomb stumbled upon what we now call Benford's
law. But in 1937, Frank Benford succinctly pronounced that a certain distribution law applies to
numerical data in general, but particularly to random data with regard to leading digits.
In 1881, astronomer and mathematician, Simon Newcomb, published the first known article
describing what has become known as Benford's law in the American Journal of Mathematics. He
noticed that books of logarithmic tables with low digits were considerably more dog–eared; but log
tables dealing with higher digits were progressively less worn. He inferred from this pattern that
fellow scientists used books with tables of lower digits far more often than they used books
concerning logarithms whose first digit started with seven, eight, and nine.
In the 1930s Benford clarified this phenomenon. To put it simply, because of the effect of
compounding, there are greater frequencies of numbers where the first digit is one, then fewer
frequencies of numbers with first digit two, then three, and so on. Consider this example of the

number 1.0000 grown at a rate of 10%:
Table 2. 1 Benfords Law digit
Growth Rate
10%
Number
First Digit
Frequency
Relative Frequency
1.0000

Pro Forma Earnings Report
1. INTRODUCTION
Pro forma earnings are earnings which often exclude non–recurring items and are defined by each
individual firm rather than under the general accepted accounting principle (GAAP). Pro forma
earnings reporting is commonplace in the U.S. (Doyle et al. 2013; Bentley et al. 2016). Items such
as nonrecurring gains and losses, depreciation and amortization expenses, write–downs,
restructuring and merger costs, stock compensation expenses, and interest expenses are often
excluded in pro forma earnings figures. Since many of these exclusions are likely to be transitory in
nature, pro forma earnings can be viewed as a better measure of permanent earnings and have
received increasing focus recently. Research studies found that pro forma earnings are more value
relevant, informative, and better associated with stock prices than GAAP earnings (Bradshaw and
Sloan, 2002; Bhattacharya et al.,2003; Brown and Sivakumar, 2003; Entwistle et al., 2010).
However, exclusion of the non–recurring items is completely discretionary (Doyle et al., 2013) and
managers may use the flexibility to opportunistically influence the market's perception of the firm's
recurring earnings (Dechow and Schrand, 2004). Managers may have strong incentives to
manipulate the reported pro forma earnings to influence investors' perceptions about the ... Show
more content on Helpwriting.net ...
This study investigates whether managers opportunistically round up the reported pro forma
earnings and whether the rounding manipulation of pro forma earnings is more severe

Best Earning Machines
A rowing machine gives you the opportunity of getting a full–body workout as it provides a low–
impact exercise without damaging your vulnerable joints. It gives you a great cardiovascular
workout as well. When using a rower machine, the muscles of your shoulders are rowing the calves,
thighs, abdomen, surplus, arms and back. A rower streamlines your body parts as a whole which is
not offered by some fitness equipments. Depending on your budget and the features you are looking
for, you can decide on what best rowing machine to choose. Generally, the price of a rower machine
is lower than, or at least comparable to an elliptical trainer. There are four types of rowing machines
for indoor use according to their resistance which are the piston resistance, air resistance, water
resistance and magnetic resistance machines. Each type of these rowers has its own advantages and
disadvantages. ... Show more content on Helpwriting.net ...
Due to its magnetic resistance, it operates almost silently. While it's virtually impossible to change
the resistance of most piston type rowers, the resistance of a magnetic type rower can easily be
changed. On the downside, it is more difficult to store mainly due to its longer main rail which can't
be folded. If you prefer an adjustable workout and have enough room for its storage, this can be the
best rowing machine to choose. Air Resistance The air resistance rower has variable resistance
which is determined by your pace. It increases its resistance naturally as you row faster so it gives
you more challenge. However, since this machine drives a fan, it is noisy to operate which can be
annoying. It is ideal for taller individuals due to its longer rail, but this also means it is difficult to
store discreetly. This can be the best rowing machine to choose if you really want a machine that
gives you a rowing experience similar to rowing on the water. Water

The Earnings And Loss Statement
The forecasted profit and loss statement will allow Columbia Memorial Hospital to predict their
upcoming financial performance over an accounting period. One of the best predictors of the future
can come from healthcare managers analyzing data, which in turn gives them the information
needed to identify whether the organization can make a profit for the given period (57). Using
historical data as a guide, if there is no change in volume, the clinic is not projected to make a profit
during the year 2010. When looking at the historical data provided for January and February 2010,
the clinic is projected to have a net profit (loss) of $3,173 per month with a projected average of
1,350 visits per month (45 visits per day). The forecasted profit and loss statement for the clinic's
average month for all of 2010 with no change in utilization is presented in Exhibit 1. The following
equations were utilized to reach an answer: In order to forecast net profit and gross margin, the most
relevant data from the historical financial data provided was used. Data from the average of Jan/Feb
2010 were used which includes: the number of visits 1,350, net revenue $54,888, salaries and wages
$13,542, physician fees $18,000, malpractice insurance $3,215, travel and education $602, general
insurance $843, subscriptions 0, electricity $1,077, water $139, equipment rental $105, building
lease $12,500, and other operating expenses totaled $8,038. The total operating

Earnings Per Share
EPS Accounting Report: Development and Problems Earnings per share is the portion of a
company's profit allocated to each outstanding share of common stock. The computation of earnings
per share is income minus preferred stock dividends divided by weighted average number of shares
of common stock outstanding at the end of the period. Earning per share is considered to be the
single most important metric to determine a company's profitability which is crucial to the decision
making of potential investors and creditors. In other words, earnings per share helps people to have
a better insight of different companies' power to make money. The higher the earnings per share
with all other factors equal, the higher each share would be worth. By ... Show more content on
Helpwriting.net ...
15. "...Income available to common shareholders is defined as net income (or income from
continuing operations) minus preferred dividends paid or declared and any current year preferred
dividends on cumulative preferred stock not declared or paid. Companies that have a discontinued
operation, extraordinary item, or cumulative effect of a change in accounting principle are to use
income from continuing operations as the 'control number' in determining whether potential
common shares are dilutive or antidilutive." In the new standards, weighted average number of
shares is the same as in the Opinion No. 15, with consideration of all stock sales, treasury stock
transactions, securities exercised or converted during the period, and stock splits and stock
dividends, retroactively applied. If the entity only has common stock outstanding and no other
securities that can result in the issuance of common shares, it will have a simple capital structure and
only need to report basic per share amounts during the period. In SFAS No. 128, primary earnings
per share is eliminated and, as a result, those tests for common stock equivalency are eliminated too
which are the "five–year test" and "three–month rule" for options and warrants, and the "five–year
test" and "effective–yield test" for convertible securities. The "three–percent rule or method" which
determines when primary or fully diluted earnings

Essay on Ethics of Earnings Management
I enjoyed the conversation on GAAP and earnings management relating to the case "Be Careful
What You Wish For: From the Middle". The conversation was brief, but got me thinking on the
ethics of earnings management. GAAP accounting is to reflect in good faith the company's actual
financial status and present reality as is. It is not to present a manipulated set of numbers that paint a
pretty picture. GAAP requires recording of revenue when there is persuasive evidence of an
arrangement, assurance of collectability, a fixed or determinable price, and delivery. If Sarah
recognizes revenue before delivery, she would violate GAAP and partake in channel stuffing. It
would not be earnings management. In my opinion, there is a fine line ... Show more content on
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Although her actions would not violate GAAP, it would allow revenue to be manipulated to "paint a
pretty picture" for third–party users. I feel earnings management is saying, 'I know what the ending
needs to be. What can I do to achieve this end? What loophole exists?' Ultimately, if there is intent
to deceive, I believe earnings management is unethical. The case "Is This My Place?...Speaking
"UP"' has been the hardest for me. I have found it difficult to decide what I would do if I were in
Ben's situation. I know it is wrong for donors to inflate the value of their donations, but I would be
afraid to say anything out of fear they might stop donating to the organization. Knowing my
manager was aware of the overstated donations and did not care would make matters worse. Unless
I had a clear plan to present to him, I would remain quiet. If donations stopped, individuals in need
of medical supplies would suffer. In weighing the options, I see the pros and cons of each side. By
letting donors continue to overstate donation amounts, donors remain happy, the organization
continues to receive donations, and those in need benefit. On the other hand, if someone does not
put a stop to the overstatements, they could continue indefinitely and grow bigger over time.
Additionally, if the IRS were to find out, the not–for–profit's reputation would be tainted and donors

Earning College Degree
Earning my degree wasn't hard for me. I come from a family where getting your college degree is
like getting your high school diploma, it was mandatory. I prepared for college throughout my high
school career so when it came time for college I knew what I had to do. Although I knew what to
expect from college I didn't realize how hard it would to be away from my family and I was not yet
used to how hard the work might be; So when I started school I needed a lot of resources to keep up
the grades that I saw fit for me. I studied hard, got help from the tutoring department and even went
to professor office hours and I even called home every day to keep up with what's going on with my
family. Even though I missed my family I was a college student

Summary: The Earnings Of College Graduates
It is often assumed that if you earned a college degree, whether it is an undergraduate degree, or
postgraduate, that you will undeniably have a larger income than those with partial or no college
experience. Since it is often assumed that people with more education pay social security taxes for a
less amount of time and receive more social security benefits than those with a lower education,
Alan Freiden and Dean Leimer decided to conduct a study by comparing the earnings of college
graduates and high school graduates. In their 1981 article, "The Earnings of College Students," they
countered this argument by stating "Yet administrative records indicate that the average ages of
entry into social–security–covered employment of high school and college ... Show more content on
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the Social Security Administration data files that they researched did not include the earnings of
college graduates during their studies and presented the earnings after they've received their degree
and began working in their permanent career. While higher education plays a significant role in
income level, there are other factors that can have an influence as well. For example, in the 1958
journal, "Education and Income," Edmund deS Brunner and Sloan Wayland compare income to
different factors including ethnicity, sex, and residential area. When region and ethnicity were taken
into account, the results show that the income of non–whites of all education levels earn 42% less
than the total population in the South, while in the North and West the difference was less than 25%.
When education is considered, the average income increases with increasing education level, but the
studies proved that females with higher education did not earn as much as males of the same age and
equal

Quality Of Earnings For Major Corporations
This paper examines the quality of earnings for major corporations. The quality of earnings is an
ongoing operation of corporations and other business alike, because the value of a business is the
current and future earnings of the firm (Schroeder et al, 2011). These earnings are usually updated
quarterly by a firm's financial analyst, which provide this for investors and other users of financial
information to make decisions about a firm's financial position in the market. However, there are
some differences in the quality of earnings throughout various industries, countries and by
competitors. This paper evaluates the quality of earnings for one major corporation for an
assessment of its current and future earnings. ... Show more content on Helpwriting.net ...
The Sarbanes – Oxley Act of 2002 (SOX), Section 404 plays an important role in a firm's earnings
quality, reliability and relevance (Singer & You, 2011). Additionally, they stated that the
implementation of the regulation helped firms reduce intentional misstatements and contributes to
the earnings reliability. During the process of evaluating the quality of earnings, there are some
warning signs that should be considered, in order to detect potential fraud or misstatement. These
warning signs will be discussed further, later in this paper. First, the quality of earnings will be
discussed. Second, the analysis of a major corporation to measure its quality of earnings. Lastly,
warning signs will show vulnerable areas where financial data can be manipulated. Prior to the
measurements of quality of earnings, there are two definitions that should be recognized; earnings
quality and earnings management. Earnings quality identifies the relationship between an entity's
accounting income and its economic income, which is attributable to high sales and low costs
(Schroeder et al, 2011). Earnings management is an attempt to use accounting techniques to produce
financial reports and present an overall positive financial position for a firm. Case 5 – 2 Earnings
Quality a. Schroeder et al (2011), provided a list of ideal measurements for discussing earnings
quality. These measurements are used by a firm's accounting professionals and financial users to
assess

Earnings Management Hw

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