这道题的考点要掌握么？

问题如下：

Question The only factor expected to give rise to normal accruals in a company’s earnings is the growth in credit sales. If there is no residual when total accruals are regressed on the growth in credit sales, total accruals are most likely equal to:

选项：

A.A.zero. B.B.the abnormal accruals. C.C.the non-discretionary accruals.

解释：

Solution

1. Incorrect because total accruals are regressed on the factors expected to give rise to normal accruals, and the residual of the regression would be considered a proxy for abnormal accruals. If there is no residual, the abnormal (not total) accruals are most likely zero.

2. Incorrect because total accruals are regressed on the factors expected to give rise to normal accruals, and the residual of the regression would be considered a proxy for abnormal accruals. If there is no residual, the abnormal accruals are most likely zero thus total accruals being equal to the normal (or non-discretionary) accruals.

3. Correct because a company’s normal accruals are modeled as a function of economic factors, such as growth in credit sales and the amount of depreciable assets. Growth in credit sales would be expected to result in accounts receivable growth, and depreciable assets would be associated with the amount of depreciation. To apply this approach, total accruals are regressed on the factors expected to give rise to normal accruals, and the residual of the regression would be considered a proxy for abnormal accruals. If the residual of the regression is zero, the total accruals would equal the normal accruals (also called “non-discretionary” accruals). An important distinction is between accruals that arise from normal transactions in the period (called “non-discretionary”) and accruals that result from transactions or accounting choices outside the normal, which are possibly made with the intent to distort reported earnings (called “discretionary accruals”).

Evaluating Quality of Financial Reports

• describe the concept of sustainable (persistent) earnings