Which situation below might indicate a company has a low quality of earnings?
A) Revenue is recorded when recognized
B) Repair costs are capitalized and then depreciated.
C) The financial statements are prepared in accordance with generally accepted accounting principles.
D) The same accounting principles are used each year.

Question

Quizplus · Accepted Answer

Capitalizing repair costs and then depreciating them can artificially inflate net income, which can create a low quality of earnings.

Which Situation Below Might Indicate a Company Has a Low