Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN: 9781285190907
Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher: Cengage Learning
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Chapter 6, Problem 8QE
90907-6-8QE
To determine
Explain the criteria that analyst must employ to assess whether to include or eliminate items from the financial statements related to these topics.
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what factors might cause an analyst to recast or adjust to the summary financial statements?
Discuss the need to study an entire set of financial statements rather than focus in obsessively on one or two numbers such as net income as provided by our authors.
1. Why is the statement of financial position a logical place to begin a discussion of financial statements?
2. Distinguish between the terms classified, comparative, and consolidated as they apply to financial statements. May a given set of financial statements have more than one of these characteristics?
3. Why is the going concern assumption an important consideration in understanding financial statements?
Chapter 6 Solutions
Financial Reporting, Financial Statement Analysis and Valuation
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- What is the purpose of financial statement analysis? State four main analysis areas that would be completed on a financial statement. State the four standards for comparison in analysis. What are the three tools used to do analysis of financial statements?arrow_forwardWhat is the difference between a multiple-step and a single-step format of the earnings statement? Which format is the most useful for financial analyst?arrow_forwardMULTIPLE CHOICE. Choose the best answer among the following choices. 6. The financial statements should be stated in terms of a common financial denominator. A. Accrual B. Going Concern C. Time Period D. Stable Monetary Unit 7. The principle of objectivity includes the concept of A. Summarization B. Verifiability C. Classification D. Conservatism 8. The financial accounting information is directed toward the common needs of users and is independent of presumptions about particular needs and desires of specific users. A. Completeness B. Verifiability C. Relevance D. Neutrality 9. The attribute of relevance include ALL EXCEPT: A. Predictive value B. Feedback value C. Materiality D. Neutrality 10. The assumption that an entity will continue to operate for the foreseeable future is called A. Accrual basis B. Comparability C. Going concern D. Cash basisarrow_forward
- a.How does the Accounting cycle facilitate financial statement reporting? how are accounting managers involved in each step. please elaborate .b.what are the two determing factors influencing the choice of GAAP and IFRS financial reporting standard?arrow_forwardA recognition test assists with deciding whether items should be included in the financial statements. Which characteristic of a financial statement does this refer to? O A. Reliable O B. Complete OC. Material O D. Neutral Type here to searcharrow_forwardIdentify and explain the six basic categories of financial statement assertions. For each assertion, provide examples of two accounts or accounting issues for which the assertion would likely pose a high risk (do not identify more than two examples)arrow_forward
- 1. How does the Accounting cycle facilitate financial statement reporting? how are accounting managers involved in each step. please elaborate. 2. what are the two determing factors influencing the choice of GAAP and IFRS financial reporting standard?arrow_forward. How are the balance sheet and the income statement related to one another? How would youexplain to a layperson the primary purpose ofeach of the statements? Which of the numbersin the income statement is considered to be mostimportant?arrow_forwardGive an example of how this chosen principle affect the financial reporting process. You can explain by giving an example of a transaction, by showing journal entries or adjusting entries, or you can give examples of how accounts are classified (as an expense or an asset forexample) according to that principle. The principle will be ( Consistency )arrow_forward
- What is probably the greatest single reason conventional financial statements are inadequate for analysis? a. Accrual accounting b. Historical cost c. Matching rule d. Going concern conceptarrow_forward6. Which statement is correct concerning interim financial reporting?I. An interim financial report may consist of a complete set of financial statement.II. An interim financial report may consist of a condensed set of financial statement. 7. An interim financial report shall include?I. Condensed statement of financial position and comprehensive incomeII. Accounting policies and explanatory notesarrow_forwardProvide an example of a judgement made in preparing the financial statementsthat can lead to estimation uncertainty at the end of the reporting period?arrow_forward
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