acc560 week 10 discussion 2

acc560 week 10 discussion 2 - . mostsignificance,ifany ,...

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Discuss and explain the factors that affect quality of earnings. Identify which factors have the  most significance, if any.   Quality of earnings refers to the overall reasonableness of reported earnings, and the degree of completeness and transparency  contained in the financial statements. Being aware of the factors related to affect quality of earnings is important to managers,  investors, creditors and other interested parties.  All of the following three factors affecting quality of earnings are significant,  because a fair and accurate earnings report is an important aspect of evaluating a company’s financial health, which is a benchmark  for a company’s interested parties to make their business decisions. 1. Alternative accounting methods.  Variations among companies in the application GAAP may hamper comparability and  reduce quality of earnings.   The differences exist not only in inventory costing methods, but also in reporting such as 
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