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Which of the following is not a motivation to manipulate earnings? A. Remain in compliance with...

Which of the following is not a motivation to manipulate earnings?

A. Remain in compliance with debt covenants.

B. Meet analyst expectation.

C. Reduce tax obligation.

D. All of the above.

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Answer #1

All of these above listed reasons can be potential motivation to manipulate earnings.

Remaining in compliance with debt covenants means that the company needs to adhere to certain financial ratios specified by the creditors and they can also manipulate earning to meet analyst expectation, and reduce the overall tax obligation on the company.

Hence, correct answer is option (D) All of the above.

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