Methods used in current accounting profit measurement focus so more on short-term earnings growth that they can t meet requirement of strategic management.

This paper investigates how to evaluate the accruals quality and the factors which have impact on the accruals quality.

Common indexes for evaluating enterprise profit-gaining capacity comprise profit index and cash flow index.

On Challenge about Economic profit to Traditional Accountant Profit;

Traditional evaluation criteria for managerial performance could hardly reflect the true situation of a business because they based on accounting profits, ignoring the measurement and recognition of equity capital cost, and had the risk of being manipulated.

enterprise profits is evaluated with accounting profits.

There is a difference between pre tax accounting profits derived from accounting principle and taxable profits derived from the tax law.

The accruals model calculates earnings management by discretionary accruals;The specific accruals model makes sure whether or not earnings management by analyzing specific means of earnings management and the earnings and accruals distribution model makes sure whether or not earnings management by distributing disciplinarian of earnings or accruals.

This paper discusses the methods and models commonly used in the foreign studies about earn-ings management,and assess the tradeoffs associated with three research designs: those based on separate accruals,those based on specific accruals and those based on the distribution of earnings after man-agement.

The company accruals have the impact on the possibility of being issued modified auditing opinion about its financial reports.