Compensation often is determined in part by meeting certain earnings targets, frequently rootedin the budget. Managers, in turn, have incentives to manipulate earnings, the budget, or both tomaximize their pecuniary benefits (such as salary, commissions, or bonus) while avoiding actionsthat might make it more difficult to meet next year's performance standards. For example, theymay choose various inventory and bad debt accounting methods, or they may manipulaterevenues and expenses as the circumstances dictate.