1

Which of the following mechanisms least likely to discourage management manipulation of earnings?

A. Debt Convenants

b. Securities regulators

C. Class action lawsuits

2

High earnings quility most likey to:

A. result in steady earnings growth

B. improve the ability to predict future earnings

C. be based on conservative accounting choices

3

The best justification for using accrual -based accounting is that it:

A. reflects the company's underlyying cash flows

B. reflects the economic nature of a nature Company's transactions

C. Limits managements's discretion in reporting financial results

4

The best justification for using cash -based accounting is that it:

A.is more conservative

B. Limits management's deicretion in reporting financial results

C. Marches the timing of revenue recognition with that of associated expenses

5

Which of the following is not a measure of aggregate accruals

The change in net operating assets

B. The difference between operating income and net operating assets

C. The difference between net income and operating and investing cash flows