The quality of earnings tends to be higher for a company that uses straight-line depreciation and defers costs whenever possible than for a company which uses accelerated depreciation and defers costs only when necessary.

Question

Quizplus · Accepted Answer

The quality of earnings is generally higher when a company uses conservative accounting practices, such as accelerated depreciation and deferring costs only when necessary, as these practices provide a more realistic view of the company's financial situation.

The Quality of Earnings Tends to Be Higher for a Company