Chapter 2 Outline-Fin4151

Chapter 2 Outline-Fin4151 - Chapter 2 Introduction to...

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Chapter 2 Introduction to Financial Statements and Other Financial Reporting Topics Forms of business entities Sole proprietorship Partnership Corporation The financial statements 1. The balance sheet 2. The statement of stockholders equity and retained earnings 3. The income statement 4. The statement of cash flows 5. Footnotes The Accounting Cycle Auditor’s Report 1. Unqualified Opinion-presents fairly First paragraph-identifies statements and responsibility of the auditor and management Second paragraph- Scope of the audit-GAAS-material-presents fairly on a reasonable basis Third paragraph-opionion of the auditor 2. Qualified Opinion-except for 3. Adverse-does not present fairly 4. Disclaimer-no opinion
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Form 10-K Annual Report to the SEC 1. Financial statements of the company
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Unformatted text preview: 2. Information on common stock-high and low price shares outstanding etc. 3. Five year summary of selected data 4. Managements discussion and analysis (MDA) 5. Two years of audited balance sheets and three years of audited income statements and statements of cash flows 6. Disclosure of foreign and domestic components of pre-tax income. • Form 10-Q Quarterly Report to the SEC • Form 8-K-Special Report to the SEC • Proxy • Efficient Market Theory Publicly available information is reflected in a company’s share price If the market does not have access to relevant information or is given fraudulent information it will not be efficient • Ethics-SEC requires a company code of ethics...
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