This post addresses reserves and income smoothing.
Not what you're looking for?
Income smoothing can certainly assist organizations in achieving certain goals. Inappropriately using reserve accounts could be considered unethical as well. How would management explain their actions related to income smoothing and using reserve accounts to their accountants/auditors while they are performing their examinations?
Do you think reserves are an area that receives attention by auditors? Explain.
Is income smoothing permitted by GAAP? Explain.
Purchase this Solution
Solution Summary
The solution provides a detailed explanation examining reserves and income smoothing.
Solution Preview
Inappropriately using reserve accounts is always considered unethical, because it deceives investors. At any point, when the goal of the company is to deceive investors, creditors, or the general public, the act is unethical (contrary to the statement above, which states that it could be considered unethical).
Management generally tries to justify their actions related to income smoothing using a ...
Purchase this Solution
Free BrainMass Quizzes
Operations Management
This quiz tests a student's knowledge about Operations Management
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.
Paradigms and Frameworks of Management Research
This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.