Earnings management is the purposeful intervention in the process of reporting income numbers with the objective of dampening the fluctuations of those numbers around their trend.

Question

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Earnings management can involve various techniques such as deferring expenses, accelerating revenue recognition, and manipulating reserves to smooth out fluctuations in reported earnings. The ultimate goal is to create a more stable and predictable pattern of earnings over time, often to meet certain expectations or targets set by investors or analysts.

Earnings Management Is the Purposeful Intervention in the Process of Reporting