1. What are some indicators of earning management?

2.Faithfull presentation and relevance are the two fundamental qualitative characteristics outlined by the 2018 revised Conceptual Framework for Financial Reporting, quoting it in part its says For information to be useful it must both be relevant and provide a faithful representation of what it purports to represent. Relevance and faithful representation are the fundamental qualitative characteristics of useful financial information and the guiding concepts that apply throughout the revised Conceptual Framework.

What is your view of the above statement with regard to earnings management Discuss

3.ZAMBEEF has recently reported steadily increasing income. The company reported income ofK300, 000 in 2017, K375,000 in 2018, and K450,000 in 2019. A number of market analysts have recommended that investors buy ZAMBEEF shares because the analysts expect the steady growth in income to continue. ZAMBEEF is approaching the end of its fiscal year in 2020, and it again appears to be a good year. However, it has not yet recorded warranty expense. The total warranty expense over the 2-year period of 2020 and 2021is K150,000.Based on prior experience, this (2020) years warranty expense should be around K75, 000 and that for next year should be K75, 000. However the Finance Manager has approached the Chief Financial Officer to suggest that a higher conservative warranty expense of K105, 000 should be recorded this year and the remaining K45,000 be recorded next year they have justified that the net effect will be the same as the total of K150,000 will be expensed over the two years period. Assume income before warranty expense is K645,000 for 2020 and K644,000 for 2021.

Required:

Using the figures provided explain why the Finance Manager has proposed that warranty expense of K105, 000 be recorded this year in stead of the estimated K75, 000, what do you think should be done