Chapter_5-solutions - useful. MINI-EXERCISES M5-1. Players...

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Chapter 5 Communicating and Interpreting Accounting Information ANSWERS TO QUESTIONS 1. The primary responsibility for the accuracy of the financial records and conformance with Generally Accepted Accounting Principles (GAAP) of the information in the financial statements rests with management, normally the CEO and CFO. Independent auditors or CPAs are responsible for conducting an examination of the statements in accordance with Generally Accepted Auditing Standards (for private companies) and PCAOB Auditing Standards (for public companies), and based on that examination, attesting to the fairness of the financial presentations in accordance with GAAP. Both management and the auditors assume a financial responsibility to users of the statements. 4. To be useful, information must be relevant; that is, it must be timely and have predictive and/or feedback value. However, if the information is not reliable (accurate, unbiased, and verifiable) it will not be relied upon, and thus will not be
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Unformatted text preview: useful. MINI-EXERCISES M5-1. Players Definitions ____C____ (1) CEO and CFO ____D____ (2) Independent auditor ____B____ (3) Users ____A____ (4) Financial analyst A. Adviser who analyzes financial and other economic information to form forecasts and stock recommendations. B. Institutional and private investors and creditors (among others). C. Chief executive officer and chief financial officer who have primary responsibility for the information presented in financial statements. D. Independent CPA who examines financial statements and attests to their fairness. M5-3. Elements of Financial Statements Financial Statements B (1) Liabilities A. Income statement. C (2) Cash from operating activities B. Balance sheet. A (3) Losses C. Cash flow statement B (4) Assets D. None of the above. A (5) Revenues C (6) Cash from financing activities A (7) Gains B (8) Owners' equity A (9) Expenses D (10) Assets personally owned by stockholder...
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Chapter_5-solutions - useful. MINI-EXERCISES M5-1. Players...

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