Earning management

i. “Cookie jar reserve” technique:
The cookie-jar technique deals with estimations of future events.  According to GAAP, management has to estimate and record obligations that will be paid in the future as a result of events or transactions in the current fiscal year based on accrual basis. But there is always uncertainty surrounding the estimation process because future is not always certain. There is no correct answer; there may be reasonably possible answers.  Management has to select a single amount according to GAAP so there is a chance of taking the advantage of earnings management.  Under the cookie-jar technique, the corporation will try to overestimate expenses during the current period to manage earnings.