Question 1

Which of the following are possible motives for managers to manipulate their earnings lower (I.e., make reported earnings less than unmanaged earnings)?(check all that apply)

The company is close to violating a debt covenant on its public bond issue because of low earnings

Congress is planning a vote on extending tax credits to companys industry due to its poor recent performance

Unmanaged earnings would fall below security analysts forecasts of earnings

A potential competitor is deciding whether to introduce new products to compete with the companys product line and will do so only if it thinks the company is making huge profits

Government is investigating potential monopolistic practices by the company because of its high levels of profitability