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Question:

During a period when net income is unexpectedly weak, managers who attempt to smooth earnings are most likely to:

A capitalize an expense.
Explaination

Management may attempt to increase reported earnings in the current period by capitalizing an expense. Capitalizing a lease would decrease earnings in the current period compared to recording an operating lease. Classifying a nonrecurring gain as recurring income would not increase net income because it already includes nonrecurring gains.