There is an excellent portion of the textbook that does this titled “Solving Accounting
Choice Problems” (pages 198 – 202).
In addition, students are encouraged to view the Solved Problem in the textbook (pages 202
– 207). NOTE: this Solved Problem is lengthy – this length of question would not be on
the final exam BUT it does show you a complete analysis of a question.
1. Determine the required – what is the question asking you to do?
2. Determine your role – who are you? An outside party providing recommendations?
The president? A shareholder? A purchaser? Who?
3. Determine the key users: who will be using your report? If you are a third party,
who are you reporting to? Who else will use your report (i.e., who are the other
users)? Who are the preparers of the financial information? Who are the users?
4. Determine the objectives of the key players: what are the objectives of the preparer
of the financial information? What are the objectives of the other users of that
information? Is there a conflict between the objectives of the preparer and the other
users? What could this mean? Use page 192, Figure 4-2, to help you determine
what objectives may exist for both the preparer and the other users.
5. Determine the constraints that may exist in the case: Is this a public company? Do
they have to follow IFRS? Is it a private company that does it need to follow
GAAP? Are there constraints re: loan requirements, measures that are being used
by the Board of Directors (minimum net income levels, etc)?