1. Users are looking for firms who can generate more future cash flows. Which one may mostly decrease earnings quality when the users examine the earnings figures as the indicator of future cash flows?
a. Unrealized holding gain or loss.
b. Credit Sales.
c. R&D expense
d. accruals
2. Which one is not correct in the context of tax accounting?
a. Deferred tax liability might be resulted when tax expense on income statement is less than tax payment based on tax code.
b. Non taxable expense causes permanent differences between pretax accounting income and taxable income.
c. Corporate income tax is an expense, not a distribution of profits to the government
d. Deferred tax assets might be resulted from Loss Carryback.
3. Which one is least possible item in Management Discussion & Analysis?
a. Market sales trend
b. discussion for the accounting policy change
c. detail information for the executive compensation
d. The effect of oil price increase on firm's performance.