Question

QUESTION 2

1. The fraudulent manipulation of earnings on an organization’s financial statements

   		Is the distortion of financial statements to suit the preparer’s objectives including increased monetary rewards such as a performance bonus
   		Allows for “income smoothing” which leads to fewer fluctuations in the reporting of earnings which can project a more positive image of themselves and/or the organization
   		Neither a. or b
   		Both a. and b

Answer 1

Answer)

My answer is both (a) and (b)

Here by Income smoothing, the Managers of business can project business to be stable throughout the financial period & having growth and by it managers can project themselves as more capable which inturn may help them to gain more benefits like performance based incentives to encourage them, salary and other perquisites hikes to retain them etc