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