CFA Practice Question

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CFA Practice Question

Which is LEAST LIKELY to be a warning signal that a company is using aggressive accounting practices?

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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