Explain how the following accounting practices tend to raise or lower the quality of a companys earnings.
Question:
Explain how the following accounting practices tend to raise or lower the quality of a company’s earnings. (Assume the continuance of inflation.)
a. Adoption of an accelerated depreciation method rather than straight-line depreciation.
b. Adoption of FIFO rather than LIFO for the valuation of inventories.
c. Adoption of a 7-year life rather than a 10-year life for the depreciation of equipment.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answered By
Anurag Agrawal
I am a highly enthusiastic person who likes to explain concepts in simplified language. Be it in my job role as a manager of 4 people or when I used to take classes for specially able kids at our university. I did this continuously for 3 years and my god, that was so fulfilling. Sometimes I've skipped my own classes just to teach these kids and help them get their fair share of opportunities, which they would have missed out on. This was the key driver for me during that time. But since I've joined my job I wasn't able to make time for my passion of teaching due to hectic schedules. But now I've made a commitment to teach for at least an hour a day.
I am highly proficient in school level math and science and reasonably good for college level. In addition to this I am especially interested in courses related to finance and economics. In quest to learn I recently gave the CFA level 1 in Dec 19, hopefully I'll clear it. Finger's crossed :)
2+ Reviews
10+ Question Solved
Related Book For 
Financial And Managerial Accounting The Basis For Business Decisions
ISBN: 9780072942828
13th Edition
Authors: Jan Williams, Sue Haka, Mark S Bettner
Question Posted:
