Which of the following is an example of managing earnings up?
A) Decreasing estimated salvage value of equipment.
B) Writing off obsolete inventory.
C) Underestimating warranty claims.
D) Accruing a contingent liability for an ongoing lawsuit.

Question

Quizplus · Accepted Answer

C) Underestimating warranty claims is an example of managing earnings up because it reduces the expenses recognized in the current period, thereby increasing reported profits.

Which of the Following Is an Example of Managing Earnings