BU387 Study Guide - Comprehensive Final Exam Guide - Financial Statement, Balance Sheet, Accounting
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Use(cid:396)s of these (cid:396)epo(cid:396)ts i(cid:374)(cid:272)lude i(cid:374)(cid:448)esto(cid:396)s, creditors, and others: managerial accounting- process of identifying, measuring, analyzing, and communicating financial information to internal decision makers. Information provided by accounting enables investors and creditors to measure and compare income vs assets of a company and assess relative risks vs returns. I(cid:374)(cid:448)esto(cid:396)s a(cid:374)d (cid:272)(cid:396)edito(cid:396)s ha(cid:448)e (cid:272)lai(cid:373)s o(cid:374) a (cid:272)o(cid:373)pa(cid:374)(cid:455)"s assets in form of equity/liability claims: proprietary perspective- idea that fr should be focused only on needs of shareholders- is(cid:374)"t (cid:272)o(cid:374)side(cid:396)ed app(cid:396)op(cid:396)iate. In order to make these assumptions, investors must understand the economic resources of a company, its claims to resources, and the changes: financial statements should be a primary source of that information. Example: a pharma company manager may not disclose negative information about ongoing drug trials as it may lower share price, and thus bonuses: the manager may even engage in greater risk-taking (management bias)
