Problem
An article published in Accounting Horizons describes various techniques that companies use to manage their earnings.
In your library, on the Internet (Google Scholar), or from some other source, locate the article "How are Earnings Managed? Evidence from Auditors" in the Accounting Horizons, 2003 (Supplement), and answer the following questions:
A. What are the four most common revenue-recognition abuses identified by auditors in that article? From the examples provided in the article, briefly explain each abuse.
B. What is the revenue-recognition abuse identified in the article related to the recognizing revenue in proportion to the percentage completed to date?
C. What effect did these revenue-recognition abuses tend to have on net income in the year they occured?
D. Did auditors tend to require their clients to make adjustments that reduced the revenue-recognition abuses they detected?