An Analyst Assessed a Company and Determined the Company Reported

question 28

Multiple Choice

An analyst assessed a company and determined the company reported a "high quality of earnings." This implies that

• A)management issued a press release indicating it was not aware of any fraud during the current year.
• B)the company's management exercised little or no discretionary influence in reporting financial statement information to shareholders.
• C)management has used its influence in determining the dollar amounts reported on financial statements.
• D)income statement items reported during the current period can be expected to reflect future income levels.

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Definitions:

Deposits

Funds placed into an account in a bank or other financial institution for safekeeping.

Compounded Quarterly

Interest on an investment or loan calculated four times per year, adding each quarter's interest to the principal for the calculation of the next quarter's interest.

Interest Rate Change

Modification in the percentage that determines the amount of interest to be paid on a loan or received on deposits over time.

Compounded Quarterly

A method of calculating interest where the accumulated interest is added to the principal sum every three months, leading to interest earnings on interest.