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Which of the following is the term within the GAAP framework whereby firms can engage in...

Which of the following is the term within the GAAP framework whereby firms can engage in a process of controlling their earnings, otherwise known as "smoothing" their earnings, as long as it's not taken to an extreme.

commingling

delisting

window dressing

earnings management

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Answer #1

Answer:

Correct answer is:

earnings management

Explanation:

Earnings management is a process of deliberately taking steps to bring about a reported level of earnings within constraints of GAAP framework. As such option D is correct.

Option A is incorrect as commingling means mixing a firm's cash with personal funds and is a legal issue.

Option B is incorrect. Delisting is not known for "smoothing" of earnings

Option C is incorrect. Window dressing can also be illegal or fraudulent.

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