The more liberal the accounting methods used by a company, the lower the quality of earnings.

Name: The more liberal the accounting methods used by a company, the lower the quality of earnings.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Liberal accounting methods may include aggressive revenue recognition or deferral of expenses, which can artificially inflate earnings in the short term but may not be sustainable or reflective of the company's true financial performance. Therefore, such methods can lower the quality of earnings.

The More Liberal the Accounting Methods Used by a Company