Which of the following statements about the quality of earnings ratio is true? Multiple Choice Failure to accrue appropriate expenses will inflate net earnings and reduce the quality of earnings ratio. Failure to accrue appropriate expenses will inflate net earnings and increase the quality of earnings ratio. When sales are growing, receivables and inventory normally increase faster than payables so the ratio increases. Seasonal variations in sales have no impact on the quality of earnings ratio.
Which of the following statements about the quality of earnings ratio is true? Multiple Choice Failure to accrue appropriate expenses will inflate net earnings and reduce the quality of earnings ratio. Failure to accrue appropriate expenses will inflate net earnings and increase the quality of earnings ratio. When sales are growing, receivables and inventory normally increase faster than payables so the ratio increases. Seasonal variations in sales have no impact on the quality of earnings ratio.
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter6: Accounting Quality
Section: Chapter Questions
Problem 2QE
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