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Financial_Accounting_Theory_Analysis_Chapter17

Financial_Accounting_Theory_Analysis_Chapter17 - CHAPTER 17...

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542 In the preceding chapters of this text, we have attempted to give a concise yet comprehensive explanation of current generally accepted accounting princi- ples. We have given primary attention to those principles promulgated by the Financial Accounting Standards Board and its predecessors in their roles as the bodies of the accounting profession authorized to issue financial account- ing standards. The discussion, therefore, has frequently been directed toward the identifying transactions to be treated as accounting information, the appropriate measurement of those transactions, criteria for classifying the data in the financial statements, and the reporting and disclosure require- ments of the various Accounting Research Bulletins, APB Opinions, and Statements of Financial Accounting Standards. This chapter seeks to draw additional attention to the special importance of disclosure in financial reporting. Specifically, we review the disclosure requirements issued by: 1. The Financial Accounting Standards Board. 2. The Securities and Exchange Commission. Additionally we examine accountants’ ethical responsibility to society. Recognition and Measurement Criteria SFAC No. 5, discussed in Chapter 2, outlines the various methods of disclosure that corporations should use in published financial statements. These disclo- sure requirements are summarized in Exhibit 17.1. CHAPTER 17 Financial Reporting Disclosure Requirements and Ethical Responsibilities
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Recognition and Measurement Criteria 543 All information useful for investment, credit, and similar decisions Financial reporting Area directly affected by existing FASB standards Basic financial statements Scope of recognition and measurement concepts statements Financial Statements Supplementary Information Other Information Notes to Financial Statements Other Means of Financial Reporting Statement of financial position Statement of earnings and comprehensive income Statement of cash flows Statement of investment by and distributions to owners Examples: Accounting policies Schedules and exhibits Explanation of financial statement items General information about the company Examples: Segment information Changing price disclosures ( SFAS No. 33 as amended) Auditor’s report Interim financial statements Examples: Discussion of competition and order backlog in SEC Form 10-K Analysts’ reports Economic statistics News articles about the company Examples: Management discussion and analysis Letters to stockholders EXHIBIT 17.1 Relationship of SFAC No. 5 to Other Method of Financial Reporting
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As seen in Exhibit 17.1, SFAC No. 5 summarizes the building blocks to disclosure as: 1. The scope of recognition and measurement.
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