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Q10. Quality of earnings refers to: Multiple Choice Positive net income. Ability of reported earnings to...

Q10.

Quality of earnings refers to:

Multiple Choice

  • Positive net income.

  • Ability of reported earnings to reflect the company’s true earnings.

  • An increasing trend in profitability.

  • All of the other answer choices are correct.

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Homework Answers

Answer #1

Correct Option B i.e. Ability of reported earnings to reflect the company’s true earnings.

Quality of earning here means that company's reported earnings that are not affected by the company's aggresive accounting policies or window dressing. A true picture of earnings by using consistent and conservative accounting policies are required for higher quality of earning.

Other given options are not explaning the concept of quality of earning such as Positive income and An increasing trend in profitability.

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