Earnings that are high quality would:
A) be informative about current performance and provide information about the long-run sustainability of profits.
B) be informative about past performance and provide information about the long-run sustainability of profits.
C) be informative about current performance and provide information about the long-run sustainability of assets.
D) be informative about past performance and provide information about the long-run sustainability of assets and liabilities.

Question

Quizplus · Accepted Answer

High quality earnings would provide information about current performance and also about the long-run sustainability of profits, indicating how well the company is generating and using its resources. This information is valuable to investors and stakeholders in making decisions regarding investments in the company. Choices B, C, and D do not fully capture the essential characteristics of high quality earnings.

Earnings That Are High Quality Would