Each of the Following Is a Factor Affecting Quality of Earnings

question 44

Multiple Choice

Each of the following is a factor affecting quality of earnings except

• A)alternative accounting methods.
• B)improper recognition.
• C)pro forma income.
• D)extraordinary items.

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Definitions:

Self-Interest

Refers to actions that elicit personal benefit or advantage, often guiding economic decision-making and behavior in the context of rational choice theory.

Consumer Sovereignty

The determination by consumers of the types and quantities of goods and services that will be produced with the scarce resources of the economy; consumers’ direction of production through their dollar votes.

Dollar Votes

The “votes” that consumers cast for the production of preferred products when they purchase those products rather than the alternatives that were also available.

Goods and Services

The physical items (goods) and activities or benefits (services) that are produced or provided to meet the needs and wants of consumers.