- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 10. Financial Reporting Quality
- Subject 2. Quality Spectrum of Financial Reports
CFA Practice Question
Select the correct statement(s).
II. Conservative accounting decisions by management can be interpreted as proof of high earnings quality.
I. More earnings management results in lower earnings quality.
II. Conservative accounting decisions by management can be interpreted as proof of high earnings quality.
Correct Answer: I only
II. Conservatism in the current financial period may allow aggressiveness in future financial periods.
I. Earnings quality is the inverse of earnings management.
II. Conservatism in the current financial period may allow aggressiveness in future financial periods.
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