Components of Increasing Earnings Quality Include All of the Following

question 38

Multiple Choice

Components of increasing earnings quality include all of the following EXCEPT:

• A)declining or stable operating expenses compared to sales.
• B)improving gross margin compared to sales.
• C)increasing cost of goods sold to sales ratio.
• D)proper revenue and expense recognition.

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Definitions:

Liquidated Damages

A predetermined amount of money that must be paid as damages for failure to perform under a contract.

Reliance Damages

Compensation awarded for losses suffered as a result of relying on a promise or agreement, even if a contract was never formalized.

Lost Profits

Refers to the income that a business could have earned but was unable to due to some form of disruption or another party's actions.

Misrepresentation

A false statement of fact made by one party to another, which has the effect of inducing that party into a contract.