Question
please help me solve this. 1. Hoover Furniture Inc., a public company, has experienced a consistent 9% increase in net income over the past five
please help me solve this.
1. Hoover Furniture Inc., a public company, has experienced a consistent 9% increase in net income over the past five years. Hoover's management team is under a lot of pressure from investors to maintain its earnings growth. In order to do so, the CEO could manage net income in order to meet the markets expectations. Which one of the following earnings management method would NOT be a method for Hoovers CEO to achieve its goal?
A. Take a big bath this year, so future years net income continues to appear higher.
B. Recognize revenue prematurely from a sales promotion with retailers.
c . Rationalize a decrease in warranty expense from prior years expense.
D.Justify a lower estimate of this years bad debt expense.
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