ZuoTi.Pro
Question

Any time management makes an estimate, there is the risk of earnings management or fraud. Accounting...

Any time management makes an estimate, there is the risk of earnings management or fraud. Accounting for bad debts requires management to make an estimate on the future collectability of receivables. Why this could be an area at risk for earnings management?

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Earning Management and Bad debts

Earning management is the important department in every company.In the department of Earning normally Bad debts are very important.becouse the increased provision for bad debt would results in an understated account receivable amount in the current period.The company require to overstating that to next year period. These types of income smoothing activities are methods of earnings management. In instances where auditor or analysts discover income being managed, they should adjust amounts back to their proper levels.company should manage accruals in limited time period.so earning department play an important role in companies

0 0
Add a comment
Know the answer?
Add Answer to:
Any time management makes an estimate, there is the risk of earnings management or fraud. Accounting...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • E-Z Loan Co. makes loans to high-risk borrowers. E-Z borrows from its bank and then lends...

    E-Z Loan Co. makes loans to high-risk borrowers. E-Z borrows from its bank and then lends money to people who have bad credit. The bank requires E-Z Loan to submit quarterly financial statements in order to keep its line of credit. E-Z’s main asset is Accounts Receivable. Therefore, Bad Debts Expense and Allowance for Bad Debts are important accounts. Slade McMurphy, the controller of E-Z Loan, wants net income to increase in a smooth pattern rather than increase in some...

  • Question 3 Accountants have the ability to choose different ways to report accounting information, and this...

    Question 3 Accountants have the ability to choose different ways to report accounting information, and this choice can have an impact on the reported financial performance and position of an entity. 1. Identify and describe in detail the different methods and/or approaches available when making reporting decisions for: a. Revenue recognition b. Accounting for uncollectible receivables (bad debts, e.g. Direct write-off method, Allowance method, % of sales approach, % of receivables approach, ageing of accounts receivable approach) 2. Explain the...

  • What are the fraud risk factors of KCI, why are they risks, and how will the...

    What are the fraud risk factors of KCI, why are they risks, and how will the risk affect my approach to the audit of KCI? King Companies, Inc. King Companies, Inc. (KCI) is a private company that owns five auto parts stores in urban Los Angeles, California. KCl has gone from two auto parts stores to five stores in the last three years, and it plans continued growth. Eric and Patricia King own the majority of the shares in KCI....

  • Search the internet and find an instance of "Earnings Mismanagement" and "Fraud" in your pathway. In...

    Search the internet and find an instance of "Earnings Mismanagement" and "Fraud" in your pathway. In a minimum of 3 paragraphs, tell us: The company name (in the subject line of your post). Why this company interests you. When they did it. Describe in detail what they did and how they got caught. Tell us what the consequences were to the individuals responsible. Cite at least two sources for your information. Examples of businesses in pathways could be: AHCD: Dance,...

  • Motivation for Earnings Management Earnings Guidance During the 1990s and early 2000s, meeting or beating analysts’...

    Motivation for Earnings Management Earnings Guidance During the 1990s and early 2000s, meeting or beating analysts’ earnings expectations emerged as an important earnings benchmark. Bartov et al. found that the stock market has been found to award firms that meet or beat analysts’ forecasts and punish firms that miss earnings targets. Meeting or beating earnings through earnings and expectations management has drawn concerns over the integrity of managers. For instance, an analysis of Nortel Networks Corporation by Fogarty et al....

  • Management accounting screton to monitor and evaluates fim's performance is used to help management to make...

    Management accounting screton to monitor and evaluates fim's performance is used to help management to make decom is valuable for internal and externalters requires third party wuditions to verify technical is a synonym for cost accounting 2. Financial accounting Totuses on the future and includes activi h in next year budget prepared for the use of department heads and other employees reports include detailed information on the various of the such as product lines or departments r ing standards must...

  • -Do any of the 5 principles (risk return trade off, time value of money, leverage, liquidity...

    -Do any of the 5 principles (risk return trade off, time value of money, leverage, liquidity vs profitability, matching principles, portfolio effect, valuation) stand out at you based on anything you've experienced? -The book discusses the recent Global Financial Crisis. Do you expect another crisis in the future? Why or why not? -What do you think were the causes of the last financial crisis? -Any ideas on how changes can be made to lower the chances of a future meltdown?

  • Thank you for all your help! An advantage of basing bad debt expense on the historical...

    Thank you for all your help! An advantage of basing bad debt expense on the historical relationship between bad debts and net credit sales is that it provides the best information to the credit department to use in its collection activities. it considers the balance in the allowance account when making the bad debt expense estimate. it provides the best estimate of the net realizable value of accounts receivable. oit best adheres to principle of cause and effect recognition. A...

  • Even in Tornado Alley, the chances of a tornado striking any particular location are pretty small. To illustrate this point, let’s estimate the risk in the state of Kansas which averages 80 tornadoes...

    Even in Tornado Alley, the chances of a tornado striking any particular location are pretty small. To illustrate this point, let’s estimate the risk in the state of Kansas which averages 80 tornadoes per year. Explain why we chose Kansas for this problem instead of Texas, given that Texas averages more tornadoes (140) per year. To frame your answer, note that the area of Kansas is approximately 211,800 mi2while the area of Texas is about 676,600 mi2. You should include...

  • Please help me to fill out this. DEMONSTRATION PROBLEM-Estimating Uncoectible Accounts Based on Aging of Receivables Bad Debt Expense Account Receivable When accountants estimate uncollectible account...

    Please help me to fill out this. DEMONSTRATION PROBLEM-Estimating Uncoectible Accounts Based on Aging of Receivables Bad Debt Expense Account Receivable When accountants estimate uncollectible accounts based on receivables, they determine what the balance of the allowance for doubtful accounts should be. Assume that an accountant determines that $2,000 of the current accounts receivable (aging receivables) will probably not be collected Also assume that the Allowance for Doubtful Accounts currently shows a $200 credit balance Why the Allowance for Doubtful...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT