When Looking to the Statement of Financial Position for an Assessment

question 11

Multiple Choice

When looking to the statement of financial position for an assessment of earnings quality, stakeholders should pay particular attention to

• A)a proportionately high cash balance, as this signifies high-quality earnings.
• B)how the company is financed and what the revenue-generating assets are.
• C)a proportionately low liability balance, as this signifies high-quality earnings.
• D)silly question.The statement of financial position is not a reflection of earnings quality.

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