BU387 Chapter Notes - Chapter 1: Accounting, International Financial Reporting Standards, Financial Statement
Document Summary
Accouning is the ideniicaion, measurement, and communicaion of inancial informaion about economic eniies to interested persons. Job, bonus, reputaion, salary increase, access to capital markets by company. The overall objecive of inancial reporing is to provide inancial informaion that is useful to users and that is decision relevant. The statements should communicate informaion about: the enity"s economic resources and claims to those resources, changes in those resources and claims. Someimes inancial statements are prepared with biased informaion to depict the company in its best light through aggressive inancial reporing (opposite to conservaive inancial reporing). This process may involve overstaing assets or net income, understaing liabiliies/expenses or carefully selecing note disclosures that emphasize posiive events. Meeing inancial analysts" expectaions and the fact that managers are oten compensated based on the company"s net income are several reasons why bias in the inancial statements may arise.
