BU397 Lecture Notes - Lecture 13: Financial Statement, Income Statement, Accounting
Document Summary
Information disclosure is an important part of capital markets: Financial statements are only one source of information for investors. Users must use caution because not all disclosure is good disclosure. Increase in reporting requirements: reasons for increasing reporting requirements of public companies: Complexity of the business environment (e. g. derivatives, business combinations, pensions) Need for timely information (e. g. interim data, financial forecasts) Accounting used as a control and monitoring device (e. g. disclosure of management compensation, related-party transactions, errors and irregularities) Accounting policies: the accounting policies of the entity must be disclosed as the first note or in a separate section preceding the notes. This note is called summary of significant accounting policies. Information on how the segment contributes to the total business operations. Only required by public companies won"t find for private enterprises. How does management look at business, what types of resources do they get that"s.
