(CMA Adapted, Jun 94 #6) Accounting Systems Vary Widely from One

question 110

Essay

(CMA adapted, Jun 94 #6) Accounting systems vary widely from one business to another, depending on the size of the firm, the volume of data to be handled, and the nature of the business.An accounting system should provide information for management decision-making and generate reports on the enterprise's financial condition and operations.The accounting profession relies on general-purpose financial statements to provide information to users; the intent of these general-purpose statements is to provide the most useful information possible to diverse user groups at minimal cost.The principal financial statements used for public reporting purposes are the statement of earnings (income statement), statement of financial position (balance sheet), and statement of cash flows.
Required:

a.Financial statements should provide information that is useful to users. Describe the level of sophistication expected of the external users of financial statements.

b. For each of the financial statements listed below, define its purpose and briefly explain how it meets the needs of external users.
1. Statement of earnings.
2. Statement of financial position.
3. Statement of cash flows.

c. Footnotes and responsibility for the financial statements
1. Explain the role of the notes to the financial statements.
2. Explain management's responsibility for the financial statements.
3. Explain the auditor's responsibility for the financial statements.

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Definitions:

Socioeconomic Disparities

Differences in wealth, education, and occupation status among various social groups, often leading to unequal access to resources.

Virginity Pledges

Promises made by individuals, typically teenagers, to abstain from sexual intercourse until marriage, often as part of organized efforts to promote abstinence.

Singlehood

The state of being unmarried or not involved in a romantic partnership, which may be a personal choice or circumstance.

Adult

A person who has reached a stage of maturity in which they have attained full physical development and are considered legally responsible for their actions.