Question

if a firm has an incentive to increase the earnings per share data at this period which if the following is detected by a finacial analyst

a- agressively recognizing revenue

b-pay more tax and accumulate deferred tax assets at this period

c- write off loss inventires at this peirod

Answer 1

The answer to the question is :+

1. Aggressively recognising revenues.

This is because aggressively recognition of revenues will increase the net income and thus will lead to higer EPS as in the EPS formula numerator is net income components

Why other options are incorrect?

Paying more taxes will decrease net income

Writing of loss inventory will make expenses more and will lead to lower net income.

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