Chapter 2 -Overview, objective,etc.

Chapter 2 -Overview, objective,etc. - Chapter 2 Financial...

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Chapter 2 Financial Reporting and Analysis REVIEW Financial statements are the most visible products of a company’s financial reporting process. The financial reporting process is governed by accounting rules and standards, managerial incentives, and enforcement and monitoring mechanisms. It is important for a user of financial information to understand the financial reporting environment along with the accounting information presented in financial statements. In this chapter, the concepts underlying financial reporting are discussed with special emphasis on accounting rules. Next the purpose of financial reporting is discussed – its objectives and how these objectives determine both the quality of the accounting information and the principles that underlie the accounting rules. The relevance of accounting information for business analysis and valuation is also discussed and limitations of accounting information are identified. Last, accrual accounting is discussed including the strengths and limitation of accruals, and the implications of accruals for financial statement analysis.
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OUTLINE Financial Reporting Environment Statutory Financial Reports Financial Statements Earnings Announcements Other Statutory Reports Factors Affecting Statutory Financial Reports Generally Accepted Accounting Principles GAAP Defined Setting Accounting Standards Role of the Securities and Exchange Commission International Accounting Standards
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Chapter 2 -Overview, objective,etc. - Chapter 2 Financial...

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