Which of the Following Statements About Earnings Quality Is False

question 100

Multiple Choice

Which of the following statements about earnings quality is false?

• A) Earnings quality is enhanced when managers are afforded discretion and judgment in applying accounting standards.
• B) Permanent earnings result in higher earnings quality, while transitory earnings result in lower earnings quality.
• C) Earnings quality is of considerable interest not only to investors and creditors but also to auditors, regulators, and academics.
• D) Earnings quality captures the degree to which reported income provides financial statement users with useful information for predicting future firm performance.