Management Prepares the Company's Financial Statements

question 5

Essay

Management prepares the company's financial statements. Consequently, management's objectives will dominate the selection of accounting policies.
Required:
Give examples of users that might have the power to influence the accounting policy choices made by preparers.

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Definitions:

Financial Activities

Transactions involving changes in equity, debt, and investments that affect a company's cash flow.

Objective Analysis

A method of evaluation or research that is based on fact and is not influenced by personal feelings or opinions.

MD&A

Management Discussion and Analysis, a section of a company's financial report where management discusses the financial and operational factors influencing results.

Comprehensive Annual Financial Reports

Detailed financial reports prepared by governments that include a wide range of financial information including the results of financial operations, condition of funds, and compliance information.