BU387- Midterm Exam Guide - Comprehensive Notes for the exam ( 43 pages long!)
Document Summary
Chapter 1 the canadian financial reporting environment. Investors and creditors rely on the financial statements to make decisions: standard setters set generally accepted accounting principles (gaap) Job, bonus, reputation, salary increase, access to capital markets by company. Need for standards: accounting standards help reduce the information asymmetry problem in financial reporting, generally accepted accounting principle (gaap) International financial reporting standards (ifrs: to be listed on a u. s. exchange, companies must follow u. s. gaap or ifrs. Parties involved in standard setting: canadian accounting standards board (acsb) International accounting standards board (iasb: the financial accounting standards board (fasb) Sometimes financial statements are prepared with biased information to depict the company in its best light through aggressive financial reporting (opposite to conservative financial reporting). This process may involve overstating assets or net income, understating liabilities/expenses or carefully selecting note disclosures that emphasize positive events.
