A high quality of earnings is indicated by:

(A) Declaration of both cash and stock dividends

(B) A history of increasing earnings and conservative accounting methods

(C) Earnings derived largely from newly introduced products

(D) Use of FIFO method of inventory during sustained inflation.

Question

Righty

Business

28 April, 02:03

A high quality of earnings is indicated by:

(A) Declaration of both cash and stock dividends

(B) A history of increasing earnings and conservative accounting methods

(C) Earnings derived largely from newly introduced products

(D) Use of FIFO method of inventory during sustained inflation.

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Answers (1)

Know the Answer?

Mckinley Wagner · Answer 1

(B) A history of increasing earnings and conservative accounting methods.

Explanation:

Quality of earnings refers to income that is earned from core operating activity of the business. So if a company declares profit that is as a result of improved processes it is high quality.

So a history of increased earnings as a result of conservative accounting is a high quality earning.

High quality earnings tend to be sustainable by identifying and improving in the operational process that drives the income.

A high quality of earnings is indicated by:(A) Declaration of both cash and stock dividends(B) A history of increasing earnings and conservative accounting methods(C) Earnings derived largely from newly introduced products(D) Use of FIFO method of inventory during sustained inflation.

A high quality of earnings is indicated by:

(A) Declaration of both cash and stock dividends

(B) A history of increasing earnings and conservative accounting methods

(C) Earnings derived largely from newly introduced products

(D) Use of FIFO method of inventory during sustained inflation.