Exam 24: Full Disclosure in Financial Reporting

FASB standards directly affect financial statements, notes to the financial statements, and management's discussion and analysis.

The return on common stock equity is calculated by dividing

Influences in a company's internal environment may relate to industry conditions, poor internal control systems, or legal and regulatory considerations.

Companies should generally use the same accounting principles for interim reports and for annual reports.

Which of the following ratios measures long-term solvency?

Nicole, Inc. uses IFRS for its external financial reporting. During 2013, an employee ofthe company was injured in the factory. Discussions with corporate attorneys resulted in adetermination that the company would be required to pay between $1,500,000 and$3,000,000 to settle the injury claim. Nicole, Inc. accrued a contingent liability onDecember 31, 2013 for $1,500,000. On February 4, 2014, Nicole, Inc. settled the lawsuitfor $3,300,000. What amount of loss should be reported on the income statement for theyear ended December 31, 2014 for Nicole, Inc. related to this lawsuit?

Fraudulent financial reporting is intentional or reckless conduct, whether act or omission, that results in materially misleading financial statements.

Notes to financial statements.An article in Dun's Review made the following comments:"Every other year, say, companies should print the notes in big typeand the base figures in smaller ones." Instructions (a) Are notes considered as part of the financial statements and what basic purpose do they serve? (b) What are the general types of notes?

Selected financial ratios.The following information pertains to Wamser Company: InstructionsCompute the following: (It is not necessary to use averages for any balance sheet figures involved.) (a) Current ratio(b) Inventory turnover(c) Accounts receivable turnover(d) Book value per share(e) Earnings per share(f) Debt to assets(g) Profit margin on sales(h) Return on common stock equity

APB Opinion No. 28 indicates that

Use the following information for questions 64 through 69. The following data are provided: Additional information: Depreciation included in cost of goods sold and operating expenses is $610,000. On May 1, 2015, 30,000 shares of common stock were issued. The preferred stock is cumulative. The preferred dividends were not declared during 2015. -The accounts receivable turnover for 2015 is

Due to the broader range of options available under U.S. GAAP compared to IFRS, note disclosures are generally more expansive under U.S. GAAP than under IFRS.

Use the following information for questions 60 through 63. Information for Ramirez Corp. is given below: Additional information: There are no preferred dividends in arrears, the balances in the Accounts Receivable and Inventory accounts are unchanged from January 1, 2015, and there were no changes in the Bonds Payable, Preferred Stock, or Common Stock accounts during 2015. Assume that preferred dividends for the current year have not been declared. -At December 31, 2015, the book value per share of common stock was

The full disclosure principle, as adopted by the accounting profession, is best described by which of the following?

Forecasts.Recent proposals by investors and others have suggested that corporations include financial forecasts in their annual reports. It further has been suggested that the CPA attest to those forecasts. Instructions (a) What arguments are advanced to support the publication of such forecasts? (b) What arguments are advanced that oppose the publication of such forecasts?

A financial projection is a set of prospective financial statements that present a company's expected financial position and results of operations.

Advertising costs may be accrued or deferred to provide an appropriate expense in each period for

On January 15, 2015, Vancey Company paid property taxes on its factory building for the calendar year 2015 in the amount of $960,000. In the first week of April 2015, Vancey made unanticipated major repairs to its plant equipment at a cost of $2,400,000. These repairs will benefit operations for the remainder of the calendar year. How should these expenses be reflected in Vancey's quarterly income statements?

IFRS requires companies to disclose transactions with related parties, including the name of the related party and any doubtful amounts related to outstanding balances for the related party.

In most situations, an auditor issues a qualified opinion or disclaims an opinion.