- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 10. Financial Reporting Quality
- Subject 4. Detection of Financial Reporting Quality Issues
CFA Practice Question
Which is LEAST LIKELY to be a warning signal that a company is using aggressive accounting practices?
B. Higher-than-expected earnings in the fourth quarter of the year
C. An increase in DSO (days sales outstanding)
A. Cash provided by operations higher than net income
B. Higher-than-expected earnings in the fourth quarter of the year
C. An increase in DSO (days sales outstanding)
Correct Answer: A
B: The company may be underreporting profits in the first three quarters of the year.
C: Are some revenues recorded prematurely?
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