Which of the Following Statements About the Quality of Earnings

Multiple Choice

Which of the following statements about the quality of earnings ratio is true?

A) Failure to accrue appropriate expenses will inflate net earnings and increase the quality of earnings ratio.
B) When sales are growing, receivables and inventory normally increase faster than trade payables so the ratio increases.
C) Failure to accrue appropriate expenses will inflate net earnings and reduce the quality of earnings ratio.
D) Seasonal variations in sales have no impact on the quality of earnings ratio.