Which one of the following is not an example of a red flag, used to evaluate earnings quality?
A) Qualified audit report
B) Net income this year is higher then net income last year
C) Poor financial performance
D) Frequent or unexplained changes in accounting policies

Question

Quizplus · Accepted Answer

Option B, net income this year is higher than net income last year, is not necessarily a red flag for evaluating earnings quality. It may indicate positive financial performance if supported by other relevant information. All other options are typical red flags that indicate potential concerns about earnings quality.

Which One of the Following Is Not an Example of a Red