{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Chapter 1 - Solution Manual

The large number of accounting frauds that were

Info icon This preview shows pages 26–27. Sign up to view the full content.

View Full Document Right Arrow Icon
The large number of accounting frauds that were evident during recent years provide examples of the ways that management has manipulated financial statement in order to fool the public. Many of these
Image of page 26

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
32 cases might not have occurred if management were not afforded the discretion to choose accounting procedures and practices. In short, accounting choice can result in earnings management, fraudulent financial reporting, a lack of financial statement transparency, financial statements that are not reliable, and financial statements that are biased. Case 1-8 The answer to this case requires an analysis of the financial statements of the three companies at the time it is assigned. Case 1-9 The answer to this case requires a visit to the Microsoft Corporation’s homepage at the time it is assigned. Financial Analysis Case The solutions to the financial analysis depend upon the company and year selected. CHAPTER 2 Case 2-1 a. The FASB's conceptual framework study should provide benefits to the accounting community such as: 1. guiding the FASB in establishing accounting standards on a consistent basis. 2. determining bounds for judgment in preparing financial statements by prescribing the nature, functions, and limits of financial accounting and reporting. 3. increasing users understanding of and confidence in financial reporting. b. Statement of Financial Accounting Concepts No. 2 identifies the most important quality for accounting information as usefulness for decision-making. Relevance and reliability are the primary qualities leading to this decision usefulness. Usefulness is the most important quality because, without usefulness, there would be no benefits from information to set against its costs. Case 2-2. a. i. The Conceptual Framework Project was an attempt by the FASB to develop concepts useful in guiding the board in establishing standards and in providing a frame of reference for resolving accounting issues. Over the years this project first attempted to develop principles or broad qualitative standards to permit the making of systematic rational choices among alternative methods of financial reporting. Subsequently the project focused on how well these overall objectives could be achieved. The FASB has stated that it intends the Conceptual Framework Project to be viewed not as a package of solutions to problems but rather as a common basis for
Image of page 27
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern