Accounting earnings is the actual amount of money that is earned by a company in a specific financial year. These earnings are the earnings that is actually reported on an accounting document and actually made public by the organization showing the public the actual amount of money earned by that organization in that quarter or a specific period of time. This is a parameter of accessing the financial position of a company as the figure shows the amount of money actually earned by the company. While making a decision regarding the investment within the company the creditors want to have a look at the accounting earnings of the company. However one thing an accountant must keep in mind that the quality of accounting earnings is more important as compared to the quantity of the earnings. There are different parameters associated with the quality of the accounting earnings of a firm. The quality accounting earnings means that a company must have an ability to repeat same amount of earnings in the coming financial period, moreover the earnings should be bankable and these must be controllable by the firm.
Whenever a public limited company declared its accounting earnings they tend to have some interest from the creditors side towards their company. Sometimes the interest of the creditors towards the company share creates some transition in the stock price of the company. The position of the company and its earnings is discussed with the creditors in a meeting that is called “earnings call”.
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