A Quality of Earnings Ratio Significantly Less Than 1 Suggests

question 69

True/False

A quality of earnings ratio significantly less than 1 suggests that a company may be using more aggressive accounting techniques in order to accelerate income recognition.

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Definitions:

Cooling-Off Rule

A regulation that allows consumers a set period to cancel agreements or contracts without penalties.

Salesperson

An individual who sells goods or services to customers for a living.

Open-End Credit Line

A flexible loan facility that allows borrowers to draw down, repay, and redraw loans up to a specified credit limit.

Finance Charge

The total cost of borrowing, including interest and any other charges assessed by the creditor on a loan or credit.