Dimons believe that eliminating quarterly financial

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Dimon’s believe that eliminating quarterly financial reports will not itself remove the pressure of short term benefits that stock holder demands from public companies. He believes that demand of short term benefits has deprived American economy from opportunity and innovation, hence leading to decline in the number of public companies. For stronger economy, Practices that encourage long-term thinking and investment should be incorporated without sacrificing the transparency and accountability that investors deserve 6. Read the Intelligent Investor article, “Cutting back on Corporate Disclosures Isn’t the Answer.” In a few sentences, briefly explain Zweig’s view of Trump’s recent proposal that public firms only disclose accounting information every 6 months instead of quarterly. Zweig’s view on reducing the number of financial statement is MOSTLY negative. He supported his views by giving some research outcomes of professors and investors who believe that the Trump’s idea can will make stock prices even further unstable against some positive or negative news about company health in market. Idea will not stop investors/stockholders from reacting on news, hence creating more temptation among executives to respond in confused situation. 2
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Riffe – ACCT 6201 – Session 3 – Fall 2018 Session 3 Income Statement Lecture Notes The earnings management articles you read serves as a backgroup highlighting the importance of understanding how earnings are measured. Accrual Basis is used for GAAP and is required for publicly-traded firms. Private firms of any significant size use accrual because it is usually required by creditors. Revenues are recognized when goods or services are delivered to customers as promised in a contract for the amount firm expects to receive. Expenses are recognized for assets consumed or liabilities incurred in the process of earning revenues. The matching principle suggests that expenses should be matched to the same period as the revenues they help generate. In addition, gains and losses must be allocated to the correct period. Revenues and expenses are not necessarily tied to cash inflows or outflows. Management has an incentive to show more revenue, less earnings and more net income under the accrual basis. The conservatism principle recognizes the estimation and uncertainty associated with financial reporting and specifies that, when in doubt about measurement of income statement items, delay revenue and accelerate expenses to reduce net income. Cash Basis recognizes revenues when cash comes in and expenses when cash goes out. It is used by small businesses because it is simple to apply. Can the cash basis statements be manipulated? If so, how? Yes, can be easily because Over the life of the firm, aggregate accrual basis income equals the aggregate cash basis income, but each approach provides a different allocation of revenues and expense for a particular period. Accordingly, if the accrual basis records more net income in one period, by definition, they will record less net income in another period.
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