Case 5-1 Income Smoothing a. Firstly‚ investors tend to invest in companies with stable earnings rather than one with volatile earnings. With stable earnings‚ there will be more likely an issuance of dividends and investors could easily predict the company’s future earnings compared to one with unstable earnings. With consistent earnings generated‚ it gives investors a secured feeling that it will again generate earnings as predicted. Confidence in the growth of rate of earnings is crucial because
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Introduction The income smoothing literature has been the centre of attention in the accounting world for the past few decades. When companies experience economic turbulence due to a poor performance year‚ they turn to the accounting management department to resolve the bottom line. A strategy that managers can approach is changing the true information content of the company. As a result this has led managers to resort to smoothing their income. Many questions have been raised whether or not it
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In mathematics‚ the exponential function is the function ex‚ where e is the number (approximately 2.718281828) such that the function ex is its own derivative.[1][2] The exponential function is used to model a relationship in which a constant change in the independent variable gives the same proportional change (i.e. percentage increase or decrease) in the dependent variable. The function is often written as exp(x)‚ especially when it is impractical to write the independent variable as a superscript
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Identify the choice that best completes the statement or answers the question. ____ 1. Tell whether the function y = 2( 5 ) shows growth or decay. Then graph the function. a. This is an exponential growth function. c. This is an exponential decay function. x b. This is an exponential growth function. d. This is an exponential growth function. ____ 2. Graph the inverse of the relation. Identify the domain and range of the inverse. x y −1 4 1 2 3 1 5 0 7 1 a. c. Domain: {x | 0 ≤ x ≤ 4}; Range:
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Exponential Functions An exponential function is in which a constant base is raised to a variable power. Exponential functions are used to model changes in population size‚ in the spread of diseases‚ and the growth of investments. They can also accurately predict types of decline typified by radioactive decay. The essence of exponential growth‚ and a characteristic of all exponential growth functions‚ is that they double in size over regular intervals. The most important exponential function is
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Today‚ earnings management methods‚ such as income smoothing‚ are becoming more and more ubiquitous ways of improving earnings quality and attractiveness to investors. Because investors pay such close attention to income levels and firm stability‚ such methods are coming under heavy scrutiny‚ and are receiving more attention in the way of research and studies. The scrutiny is an attempt to explain the effects‚ and whether or not‚ in the long-run‚ these methods of earnings management are‚ in fact
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For unit three seminar it discussed the filing of a complaint for a criminal case. It also talks about the setting of bond through the defendant’s arraignment. For the seminar we were also to discuss the difference between grand jury and preliminary hearing. For the start of a criminal case it begins with the filing of a complaint‚ mostly someone reporting a crime or annoyance. Then an investigation is launched and if a crime was committed and a suspect with enough evidence against them they are
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principles. Profits can be changed easily by using certain accounting methods or manipulating accruals. When discovered‚ this information will have a negative effect on a company ’s share price and its reputation in general. Methods of Income Smoothing In order to present a more positive result to shareholders and a more favorable view of company’s results‚ numerous methods exist that can be used by accountants. Most methods are achieved by using book entries. The Depreciation Method The
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Why is consumption smoothing? The consumption function plays a major role in GDP of macroeconomy. Hence‚ its stability is of great importance to a country’s economy. The economist Irving Fisher proposed “Intertemporal choice” is the study of the relative value people assign to two or more payoffs at different points in time. Most choices require decision-makers to trade-off costs and benefits at different points in time. (Fisher‚ 1930) According to Fisher’s model‚ economists Franco Modigliani created
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LOGARITHMIC AND EXPONENTIAL FUNCTIONS Inverse relations Exponential functions Exponential and logarithmic equations One logarithm THE LOGARITHMIC FUNCTION WITH BASE b is the function y = logb x. b is normally a number greater than 1 (although it need only be greater than 0 and not equal to 1). The function is defined for all x > 0. Here is its graph for any base b. Note the following: • For any base‚ the x-intercept is 1. Why? To see the answer‚ pass your mouse over the colored
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