Which one of the following is not an example of a red flag to one should be aware of when evaluating earnings quality?
A)Qualified audit report
B)Net income this year is higher than net income from last year
C)Reported earnings consistently higher than operating cash flows
D)Frequent or unexplained changes in accounting policies

Question

Quizplus · Accepted Answer

Net income increasing from one year to the next can be a positive sign of earnings quality, particularly if it is accompanied by other positive indicators. The other options (A, C, and D) are all red flags that may suggest lower earnings quality.

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