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Listed Below Are Five Terms Followed by a List of Phrases

Question 140

Matching

Listed below are five terms followed by a list of phrases that describe or characterize the terms. Match each phrase with the best term placing in the space provided.

Premises:

Responses:

Practices that result in reporting higher income, higher assets, and lower liabilities.

Discontinued operation

An event that is (1) unusual in nature and (2) infrequent in occurrence.

Aggressive accounting practices

Practices that result in reporting lower income, lower assets, and higher liabilities.

Extraordinary item

The sale or disposal of a significant component of a company's operations.

Conservative accounting practices

Refers to the ability of reported earnings to reflect the company's true earnings, as well as the usefulness of reported earnings to predict future earnings.

Quality of earnings

Premises:

Practices that result in reporting higher income, higher assets, and lower liabilities.

An event that is (1) unusual in nature and (2) infrequent in occurrence.

Practices that result in reporting lower income, lower assets, and higher liabilities.

The sale or disposal of a significant component of a company's operations.

Refers to the ability of reported earnings to reflect the company's true earnings, as well as the usefulness of reported earnings to predict future earnings.

Responses:

Discontinued operation

Aggressive accounting practices

Extraordinary item

Conservative accounting practices

Quality of earnings

Correct Answer:

Premises:

Responses:

Practices that result in reporting higher income, higher assets, and lower liabilities.

An event that is (1) unusual in nature and (2) infrequent in occurrence.

Practices that result in reporting lower income, lower assets, and higher liabilities.

The sale or disposal of a significant component of a company's operations.

Refers to the ability of reported earnings to reflect the company's true earnings, as well as the usefulness of reported earnings to predict future earnings.

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