Some people are tempted to make their finances look worse to get financial aid. Companies sometimes also manage their financial numbers in order to accomplish certain goals. Earnings management is the planned timing of revenues, expenses, gains, and losses to smooth out bumps in net income. In managing earnings, companies'actions vary from being within the range of ethical activity, to being both unethical and illegal attempts to mislead investors and creditors. Provide responses for each of the following questions Discuss whether you think each of the following actions (adapted from the FinAid website) to increase the chances of receiving financial aid is ethical 1. Spend down the student's assets and income first, before spending parents' assets and income. BI T T T. !!! E E T + Decrease indent O Word(s 2. Accelerate necessary expenses to reduce available cash. For example, if you need a new car, buy it before applying for financial aid B 7 T LE Will E a . O Words) 3. State that a truly financially dependent child is independent B 1 T " III . W w INI MacBook 80 F 000 F 00 17 DII FS DD 59 515 11 A & 2 3 4 5 6 7 8 8 9 0 - W E R T Y U 0 S D F G . J L 4. Have a parent take an unpaid leave of absence for long enough to get below the "threshold" level of income. B , . 99 O Wordis) eTextbook and Media What are some reasons why a company might want to overstate its earnings? B 1 T, E 1 What are some reasons why a company might want to understate its earnings? 99 Lill BI UT TIE 1 F O Word(s) e Textbook and Media Under what circumstances might an otherwise ethical person decide to illegally overstate or understate earnings? B I Y T I. TH HE a