Homework 1

Homework 1 - resources and claims to those resources b The...

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Michael M. Bailey Intermediate Accounting I Sal LaManna Chapter 1 Homework CA 1-2 a) Three objectives of financial reporting: 1. Is useful to present and potential investors and creditors and other users in making rational investment, credit, and similar decisions. The information should be comprehensible to those who have reasonable understanding of business and economic activities and are willing to study the information with reasonable diligence. 2. Helps present and potential investors, creditors, and other users assess the amounts, timing, and uncertainty of prospective cash receipts from dividends or interest and the proceeds from the sale, redemption, or maturity of securities or loans. 3. Clearly portrays the economic resources of an enterprise, the claims to those resources, and the effects of transactions, events, and circumstances, that change its
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Unformatted text preview: resources and claims to those resources. b) The sophistication of potential users of financial information are as follows: most directly concerned with a particular business enterprise are generally interested in its ability to generate favorable cash flows because their decisions relate to amounts, timing, and uncertainties of expected cash flows. To investors, lender, suppliers, and employees, a business enterprise is a source of cash in form of dividends or interest and perhaps appreciated market prices, repayment of borrowing, payment for goods or services, or salaries or wages. CA 1-12 Staff Positions (d) Interpretations (of the Financial Accounting Standards Board) (f) Statement of Financial Accounting Standards (c) EITF Statements (e) Opinions (a) Statement of Financial Accounting Concepts (b)...
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