Professional Documents
Culture Documents
CHARACTERISTICS OF ACCOUNTING
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FINANCIAL REPORTING
Financial accounting provides historical information
Financial reporting is used by both internal and
external users
External users include such decision makers as
investors, creditors, unions, government agencies
Major financial statements (required by GAAP):
What
Note Disclosures
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Financial
MANAGEMENT BIAS
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For private companies, pension plans, and not-forprofit entities, GAAP consists of :
Primary
sources
Other
sources
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International
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PROFESSIONAL JUDGEMENT
There cannot be a rule for every situation
Standards in Canada are based primarily on
principles rather than specific rules
Therefore, must use professional judgement
The United States uses a rules-based approach
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Public
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CLICKER QUESTIONS
All of the following are objectives of financial reporting except to
provide information:
a) about entity resources, claims to those resources, and changes to
them.
b) that is useful in capital allocation decisions.
c) about the major shareholders of an entity
d) that is useful in assessing management stewardship.
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CLICKER QUESTIONS
Potential causes of management bias include all of the
following except:
a)Financial statement users must exercise significant
professional judgement in interpretation of financial
information
b)Financial
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