The-definition.com

Definition

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.

Share it:  Cite

More from this Section

  • Recoverable Depreciation
    When a lawsuit is issued on a contract with replacement value coverage, Recoverable Depreciation ...
  • Short Put
    A Short Put option is simply the special offer of an option contract. Whenever investors ...
  • Savings account or time deposit
    Savings account or time deposit is a sum of money, deposited with a bank, that cannot ...
  • Trade receivables
    Notes receivable and accounts receivable that result from sales transactions are often ...
  • Straight-line
    Under the straight-line method, companies expense the same amount of depreciation for ...