Study Session 9: Financial Reporting and Analysis: Financial Reporting Quality and Financial Statement Analysis
Hi guys, just to check is it correct that under the revaluation model, it’s permitted for an asset to revalued about historical cost? I.e. If the historical cost is £100,000 and it is revalued to £2.5m
Q Which of the following will most likely result in lower financial reporting quality?
A Engaging in fraudulent financial reporting.
B A low allowance for uncollectable accounts receivables.
C Selecting alternatives within accepted accounting principles that distort results to achieve a desired outcome.
According to the readings, C is straightforward. But why cannot B also cause lower financial reporting quality? And fraudulent reporting is lower quality indeed??
Why is “rapid growth / unusual profitability” a threat to financial profitability forcing the management to resort to manipulation? Is it the pressure to maintain the levels?
the below doesnt make any sense even with the suggested answer. Would appreciate if you could help to explain how the 24% is derived.
If a firm’s annual days sales in payables (DSP) was 60 days, and the annual cost of goods sold is expected to increase by 22% (and the number of days remain constant), which of the following changes in the end-of-period accounts payable balance will most likely improve (increase) the operating cash flow?
A 24% decrease. B 20% increase. C 24% increase
A company’s taxable income is the basis for income tax payable (ITPL), which appears on company’s balance sheet (B/s).
A company’s income tax expense (ITE) appears in the income statement,(I/s) and ITE= ITPL +- DTL/DTA.
ITPD - Income tax paid (the actual cash outflow) reduces the income tax payable, which is carried on in the B/s as liability
Please help me to understand why mangement cant do classification of investment accounted for under the equity method and investment in consolidated subsidiaries?
Exactly what all transactions take place when employee exercise stock options?
And companies get tax exemtion because that already had been considered as expense when granted to employee?
As per my understanding : “If Inventory is increasing then current asset is increasing and CFI is decreasing and if sale is increasing then inventory is decresing and CFO is increasing”.
Please correct me in case above statement does not make sense and also help me to undestandand the dependancy/linkage/relation of sale and inventory.
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