LO 9.4 Which of the following is true about earnings management?Choose one answer from the options below.A. It works within the constraints of GAAP.B. It works outside the constraints of GAAP.C. It tries to improve stakeholder’s views of the company’s financial position.D. Both B and CE. Both A and C BackNext

Earnings per share computations related to IFRS and GAAP:a.are essentially similar.b.result in an amount referred to as earnings per share.c.must deduct preferred (preference) dividends when computing earnings per share.d.All of the answer choices are correct.

"All of the following are correct about the 'earnings' that is managed by companies, except for:" Earnings includes total comprehensive income. Earnings is 'net profit after tax'. Earnings excludes 'other comprehensive income'. Earnings is used to compute the Earnings per share ratio.

Accounting is only relevant to profit-oriented organisations. Question 1 Answer True False

11. Many commentators believe that the trend of earnings per share (EPS) is a more reliable indicator of underlying performance than the trend of the net profit for the year. Which of the following statements supports this view? A Net profit can be manipulated by the choice of accounting policies but EPS cannot be manipulated in this way. B EPS takes into account the additional resources made available to earn profit when new shares are issued for cash, whereas net profit does not. C The disclosure of a diluted EPS figure is a forecast of the trend of profit for future periods. D The comparative EPS is restated where a change in accounting policy affects the previous year’s profits. 12. Which TWO of the following statements about IAS 20 Accounting for Government Grants and Disclosure of Government Assistance are true? A A government grant related to the purchase of an asset must be deducted from the carrying amount of the asset in the statement of financial position. B A government grant related to the purchase of an asset should be recognised in profit or loss over the life of the asset. C Free marketing advice provided by a government department is excluded from the definition of government grants. D Any required repayment of a government grant received in an earlier reporting period is treated as prior period adjustment

Which TWO of the following do NOT need to be removed from an entity’s net profit in a statement of profit or loss in order to calculate the earnings figure to be used in the earnings per share calculation? A Redeemable preference share dividends B Irredeemable preference share dividends C Profit attributable to the non‐controlling interest D An error in expenses discovered after the financial statements have been authorised for issue E Ordinary dividends