Quality of earnings
Quality of earnings provides full and transparent information that will not confuse or mislead users of the financial statements.
The issue of quality of earnings has taken on increasing importance because recent accounting scandals suggest that some companies are spending too much time managing their income and not enough time managing their business. Issues related to quality of earnings are (1) alternative accounting methods, (2) pro forma income, and (3) improper recognition.
Category: Accounting & Auditing
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