Question
In evaluating a company, it is important that the evaluator of the financial statements consider the quality of the financial reporting. Fraser and Ormiston (2010)
In evaluating a company, it is important that the evaluator of the financial statements consider the quality of the financial reporting. Fraser and Ormiston (2010) identify six broad areas that management could influence the reporting of earnings. These six area are
Accounting choices, estimates, and judgments
Changes in accounting methods and assumptions
Discretionary expenditures
Non-recurring transactions
Non-operating gains and losses
Revenue and expense recognitions that do not match cash flow.
Read the attached file titled The Concept of Earning Quality (Links to an external site.) by Leopold Berstein and Joel Siegel explaining earning quality. Requirements: (Part A: 50 points maximum; part B: 50 points maximum) A. In this discussion, critique the concepts discussed in this paper. B. In a threaded discussion, analyze at least two other classmates critiques. This activity addresses course learning objective 3 as described in the course syllabus. References: Bernstein, L. A. & Siegel, J. G. (1979). The concept of earnings quality. Financial analysts Journal, 35(4), pp. 72-75.
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