Chapter 24 Full Disclosure in Financial Reporting

Chapter 24 Full Disclosure in Financial Reporting - Chapter...

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Unformatted text preview: Chapter 24: Full Disclosure in Financial Reporting (pages: 1281-1348) LEARNING OBJECTIVES 1. Review the full disclosure principle and describe implementation problems. 2. Explain the use of notes in financial statement preparation. 3. Discuss the disclosure requirements for major business segments. 4. Describe the accounting problems associated with interim reporting. 5. Identify the major disclosures in the auditors report. 6. Understand managements responsibilities for financials. 7. Identify issues related to financial forecasts and projections. 8. Describe the professions response to fraudulent financial reporting. *9. Understand the approach to financial statement analysis. *10. Identify major analytic ratios and describe their calculation. *11. Explain the limitations of ratio analysis. *12. Describe techniques of comparative analysis. *13. Describe techniques of percentage analysis. *14. Describe the current international accounting environment. *This material is covered in an Appendix to the chapter. LECTURE OUTLINE A. Full Disclosure Principle: Report any financial facts significant enough to influence the judgment of an informed reader. 1. Recent trends in financial reporting reflect an increase in the amount of disclosure found in financial statements. 2. Increased disclosure is a result of the efforts of the SEC and the FASB. 3. The pronouncements issued by these organizations include many disclosure requirements that are designed to improve the financial reporting process. 4. Issues to be considered: (a) Costs of Disclosure. (b) Information Overload. (c) The increase in disclosure requirements is linked to: (1) Complexity of the Business Enterprise. (2) Necessity for Timely Information. (3) Accounting as a Control and Monitoring Device. 24-1 TYPES OF FINANCIAL INFORMATION 24-2 B. Notes to the Financial Statements: 1. A means of full disclosure and providing qualitative and supplementary data 2. Integral part of financial statements 3. Summary of Significant Accounting Policies. a. Should be the first note. b. informs the statement reader of the accounting methods used in preparing the information included in the financial statements. c. policies are specific accounting principles and methods currently employed and considered most appropriate in the circumstances to present fairly the financial statements of the enterprise. 4. Inventory (Chapter 9). The basis upon which inventory amounts are stated and the method used in determining cost. a. lower of cost or market b. LIFO, FIFO, Average Cost 5. Property, Plant, and Equipment (Chapter 11). a. The basis of valuation (usually historical cost), pledges, loans, or other commitments related to these assets....
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Chapter 24 Full Disclosure in Financial Reporting - Chapter...

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