Accounting Across the Organization

Accounting Across the Organization - companies present...

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  Accounting Across the Organization Steve Cole/ PhotoDisc, Inc./Getty Images. Many company managers preparing their annual reports are piling on the paper in order to ease  Enron-type worries on the part of investors. Natural-gas producer  Williams Companies, Inc.  turned  out an eye-glazing annual report 1,234 pages in length.  Nortel Networks Corporation  added an extra  two dozen pages to its annual report. Other companies have followed suit. The trend to fuller disclosure has been a long time coming, observers say. But they caution that more  paper does not necessarily mean more information that the average investor will understand. In  addition, it is important to remember that annual reports are just one piece of the puzzle as to how 
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Unformatted text preview: companies present information to decision-makers. Why might adding extra pages to the annual report not be beneficial to investors and analysts? What should be management's overriding objective in financial reporting? Answer: When given too much information, investors may suffer from “information overload”—they may have a hard time sorting out what is important from what is not. Management's overriding financial reporting objective should be to provide an accurate depiction of the company's financial position and operating results in a clear and concise fashion. It should provide as much detail as is necessary to accomplish that....
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