Earnings management generally makes income statement information more useful for predicting future earnings and cash flows.

Question

Quizplus · Accepted Answer

Earnings management involves manipulating financial information to present a more favorable picture of the company's financial performance. This can lead to distorted income statement information that is not a reliable predictor of future earnings and cash flows. In fact, it can undermine the usefulness of financial statements for investors and other stakeholders.

Earnings Management Generally Makes Income Statement Information More Useful for Predicting