Reading 31: Financial Reporting Standards LOS h习题精选 reporting, standards, accounting, 2010

honeycfa

LOS h: Discuss the importance of monitoring developments in financial reporting standards and of evaluating company disclosures of significant accounting policies.

 

An analyst can find a company’s significant accounting methods and estimates in:

A) both the footnotes to the financial statements and Management’s Discussion and Analysis.

B) only the footnotes.

C) both the footnotes and in the auditor’s opinion.

---

Companies that prepare financial statements under IFRS or U.S. GAAP must disclose their accounting policies and estimates in the footnotes and address those policies and estimates where significant judgment was required in Management’s Discussion and Analysis. The auditor’s opinion discusses whether policies have been applied appropriately, but does not include the estimates and policies themselves.

 

honeycfa

Management disclosure of the likely impact of implementing recently issued accounting standards is least likely to:

A) conclude that the standard does not apply.

B) conclude that the standard will not affect the financial statements materially.

C) state that the impact of the standard is impossible to determine.

---

A disclosure that is required for public companies is the likely impact of implementing recently issued accounting standards. Management can discuss the impact of adopting the standard, conclude that the standard does not apply or will not affect the financial statements materially, or state that they are still evaluating the effects of the new standards. Analysts should be aware of the uncertainty that this last statement implies.

honeycfa

An analyst is least likely to use disclosures of accounting policies and estimates to evaluate:

A) whether the disclosures have changed since the prior period.

B) what policies are likely to be modified in future periods.

C) what policies are discussed.

---

Companies that prepare financial statements under IFRS or U.S. GAAP must disclose their accounting policies and estimates in the footnotes and Management’s Discussion and Analysis. An analyst should use these disclosures to evaluate what policies are discussed, whether they cover all the relevant data in the financial statements, which policies required management to make estimates, and whether the disclosures have changed since the prior period.

honeycfa

Disclosures regarding accounting policies and estimates are found in:

A) only the footnotes to the financial statements.

B) only the Management’s Discussion and Analysis.

C) both the footnotes to the financial statements and the Management’s Discussion and Analysis.

---

Both the footnotes to the financial statements and the Management’s Discussion and Analysis contain discussion regarding significant accounting policies and estimates.