Quality of earnings is affected by all of the following except
A)executive compensation.
B)accounting methods.
C)accounting estimates.
D)one-time items.

Question

Quizplus · Accepted Answer

Executive compensation does not directly affect the quality of earnings. It may indirectly affect earnings if it is based on certain financial targets or incentives that could lead to aggressive accounting practices or manipulation of financial statements. However, overall, executive compensation is not a determining factor in the quality of earnings. Accounting methods, estimates, and one-time items all have a direct impact on the quality of earnings.

Quality of Earnings Is Affected by All of the Following