State a particular example of poor accounting quality that might hamper the forecasting of expected future earnings.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 6, Problem 1QE

90907-6-1QE

To determine

State a particular example of poor accounting quality that might hamper the forecasting of expected future earnings.

Expert Solution & Answer

Explanation of Solution

Example of poor accounting quality that might hamper the forecasting of expected future earnings:

For example, an entity that reports earnings ruled out by a substantial one-time gain from the sale of real estate tangential to the entity’s operations indicates poor earnings quality as the probabilities are little that the firm can reproduce the gain in upcoming periods.
One more example is an entity stating a huge expense from a warehouse fire that did not have insurance coverage. Excessive small earnings were recorded as the fire loss perhaps is not revealing future earnings of the entity.
But still, it is significant to remember that highly qualified disclosure can alleviate problems relating to earnings quality. If these items are temporary and the firm’s disclosure tags them in a method that highpoints the transitivity, the analyst might exclude the items and earnings quality is high.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

The concept of earnings quality has several dimensions, but two characteristics often dominate. The accounting information should be a fair representation of performance for the reporting period and, The information should provide relevant information to forecast expected future earnings. Provide a specific example of poor accounting quality that would hinder to forecasting of expected future earnings.

Which of the following statements is/are true? Select one: Non-financial measures are more difficult to action. Non-financial measures may reflect drivers of future financial performance. Non-financial measures are not consistent with contemporary management accounting. Non-financial measures are more difficult to understand.

Needles talks about the use of a continuum ranging from questionable or highly conservative to fraud to assess the amount to be recorded for an estimated expense. Do you believe that the choice of an overly conservative or overly aggressive amount would reflect earnings management? Explain.

Answer 2

Question

Chapter 6, Problem 1QE

90907-6-1QE

To determine

State a particular example of poor accounting quality that might hamper the forecasting of expected future earnings.

Expert Solution & Answer

Explanation of Solution

Example of poor accounting quality that might hamper the forecasting of expected future earnings:

For example, an entity that reports earnings ruled out by a substantial one-time gain from the sale of real estate tangential to the entity’s operations indicates poor earnings quality as the probabilities are little that the firm can reproduce the gain in upcoming periods.
One more example is an entity stating a huge expense from a warehouse fire that did not have insurance coverage. Excessive small earnings were recorded as the fire loss perhaps is not revealing future earnings of the entity.
But still, it is significant to remember that highly qualified disclosure can alleviate problems relating to earnings quality. If these items are temporary and the firm’s disclosure tags them in a method that highpoints the transitivity, the analyst might exclude the items and earnings quality is high.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 6, Problem 1QE

90907-6-1QE

To determine

State a particular example of poor accounting quality that might hamper the forecasting of expected future earnings.

Expert Solution & Answer

Explanation of Solution

Example of poor accounting quality that might hamper the forecasting of expected future earnings:

For example, an entity that reports earnings ruled out by a substantial one-time gain from the sale of real estate tangential to the entity’s operations indicates poor earnings quality as the probabilities are little that the firm can reproduce the gain in upcoming periods.
One more example is an entity stating a huge expense from a warehouse fire that did not have insurance coverage. Excessive small earnings were recorded as the fire loss perhaps is not revealing future earnings of the entity.
But still, it is significant to remember that highly qualified disclosure can alleviate problems relating to earnings quality. If these items are temporary and the firm’s disclosure tags them in a method that highpoints the transitivity, the analyst might exclude the items and earnings quality is high.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 6, Problem 1QE

90907-6-1QE

To determine

State a particular example of poor accounting quality that might hamper the forecasting of expected future earnings.

Expert Solution & Answer

Explanation of Solution

Example of poor accounting quality that might hamper the forecasting of expected future earnings:

For example, an entity that reports earnings ruled out by a substantial one-time gain from the sale of real estate tangential to the entity’s operations indicates poor earnings quality as the probabilities are little that the firm can reproduce the gain in upcoming periods.
One more example is an entity stating a huge expense from a warehouse fire that did not have insurance coverage. Excessive small earnings were recorded as the fire loss perhaps is not revealing future earnings of the entity.
But still, it is significant to remember that highly qualified disclosure can alleviate problems relating to earnings quality. If these items are temporary and the firm’s disclosure tags them in a method that highpoints the transitivity, the analyst might exclude the items and earnings quality is high.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 6, Problem 1QE

90907-6-1QE

To determine

State a particular example of poor accounting quality that might hamper the forecasting of expected future earnings.

Expert Solution & Answer

Explanation of Solution

Example of poor accounting quality that might hamper the forecasting of expected future earnings:

For example, an entity that reports earnings ruled out by a substantial one-time gain from the sale of real estate tangential to the entity’s operations indicates poor earnings quality as the probabilities are little that the firm can reproduce the gain in upcoming periods.
One more example is an entity stating a huge expense from a warehouse fire that did not have insurance coverage. Excessive small earnings were recorded as the fire loss perhaps is not revealing future earnings of the entity.
But still, it is significant to remember that highly qualified disclosure can alleviate problems relating to earnings quality. If these items are temporary and the firm’s disclosure tags them in a method that highpoints the transitivity, the analyst might exclude the items and earnings quality is high.

Answer 6

Chapter 6, Problem 1QE

90907-6-1QE

To determine

State a particular example of poor accounting quality that might hamper the forecasting of expected future earnings.

Expert Solution & Answer

Explanation of Solution

Example of poor accounting quality that might hamper the forecasting of expected future earnings:

For example, an entity that reports earnings ruled out by a substantial one-time gain from the sale of real estate tangential to the entity’s operations indicates poor earnings quality as the probabilities are little that the firm can reproduce the gain in upcoming periods.
One more example is an entity stating a huge expense from a warehouse fire that did not have insurance coverage. Excessive small earnings were recorded as the fire loss perhaps is not revealing future earnings of the entity.
But still, it is significant to remember that highly qualified disclosure can alleviate problems relating to earnings quality. If these items are temporary and the firm’s disclosure tags them in a method that highpoints the transitivity, the analyst might exclude the items and earnings quality is high.

Answer 7

Chapter 6, Problem 1QE

90907-6-1QE

To determine

State a particular example of poor accounting quality that might hamper the forecasting of expected future earnings.

Answer 8

Expert Solution & Answer

Explanation of Solution

Example of poor accounting quality that might hamper the forecasting of expected future earnings:

For example, an entity that reports earnings ruled out by a substantial one-time gain from the sale of real estate tangential to the entity’s operations indicates poor earnings quality as the probabilities are little that the firm can reproduce the gain in upcoming periods.
One more example is an entity stating a huge expense from a warehouse fire that did not have insurance coverage. Excessive small earnings were recorded as the fire loss perhaps is not revealing future earnings of the entity.
But still, it is significant to remember that highly qualified disclosure can alleviate problems relating to earnings quality. If these items are temporary and the firm’s disclosure tags them in a method that highpoints the transitivity, the analyst might exclude the items and earnings quality is high.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Ch. 6 - Prob. 1QE Ch. 6 - Prob. 2QE Ch. 6 - Prob. 3QE Ch. 6 - Prob. 4QE Ch. 6 - Assume that a corporation needs to enter the...Ch. 6 - Prob. 6QE Ch. 6 - Prob. 7QE Ch. 6 - Prob. 8QE Ch. 6 - Prob. 9QE Ch. 6 - Checkpoint Systems is a leading provider of source...

State a particular example of poor accounting quality that might hamper the forecasting of expected future earnings.

State a particular example of poor accounting quality that might hamper the forecasting of expected future earnings.

Explanation of Solution

Want to see more full solutions like this?

Chapter 6 Solutions