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Quality of Earnings

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Much has been written on "quality of earnings." In this context, several areas are cited, examples below:

? Accounting choices, estimates, and judgments
? Changes in accounting methods and assumptions
? Discretionary expenditures
? Nonrecurring transactions
? Nonoperating gains and losses
? Revenue and expense recognition that does not match cash flows

Cite 2 examples for *each* of these 6 bullet points in this practice problem.

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This explanation provides you a comprehensive argument relating to quality of earnings.

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Much has been written on "quality of earnings." In this context, several areas are cited, examples below:

? Accounting choices, estimates, and judgments:
Losses on financing receivables;
Asset impairment on long-lived assets: You should think in terms of different forms ...

Solution provided by:
Hatim Baxamusa, MBA
Education
  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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