Economics Homework Help

I’m working on a finance question and need guidance to help me learn.

Your summary must consist of at least one paragraph of reasonable length (7-9 sentences). Your post must include the following (in this order):

1, Title (Chapter # and topic)

2. Summary of the presentation

3. Link to the video

Earnings Management (Chapter 6 – topic: earnings management)

blow this is an example

The following video by Monte Wynder is a summary of the key issues associated with earnings management.

He describes how cash accounting is easy, verifiable, and it does not require judgement. Accrual accounting on the other hand does involve judgement and choice. Depreciation, inventory valuation, and asset revaluation all require adjustments to cash flows so that they provide information about real financial position and performance. Earnings management is about conveying information to external parties. It is reasonable and legal, intended to achieve stable and predictable financial results. However, what it is intended for is not always the result.

Income smoothing is an example of providing stable and predictable financial results by shifting earnings from peak periods to less successful periods. This can be used to increase earnings quality. A firm would have earnings quality if the earnings reported currently are consistent with future earnings.

Whether judgement is used for good or bad depends on the motive of the manager. A few examples of an opportunistic manager (one who misleads or influences outcomes):

• A manager who increases their compensation
• Increases or decreases share price
• Writes off underperforming assets
• Reduces profit in a period where the blame can be placed on a past manager
• Restructuring

This type of manager either does not consider the consequences, or believes they will not get caught. Putting their reputation and the reputation of the firm on the line.

https://youtu.be/NzUWwk1iYAgLinks to an external site.