The Quality of Financial Reporting Is an Important Issue in the Chapter

question 49

Essay

The quality of financial reporting is an important issue in the chapter. Explain how and why the quality of financial reporting is an underlying issue in the frauds discussed in the chapter.

Know the accounting treatment for issuing stock for non-cash considerations such as services and land.

Understand the differences between common stock and preferred stock, including par value, stated value, and no-par stock.

Distinguish between the concepts of authorized, issued, and outstanding shares.

Comprehend the reasons for acquiring treasury stock and the effects of such transactions.

---

Definitions:

Abduction

The movement of a limb or other part away from the midline of the body or from another part.

Extremities

The terminal parts of the body—the arms, legs.

Center Line

A reference line that runs down the center of an object or space, commonly used in design and engineering to mark symmetry or alignment.

Aponeurosis

Extension of connective tissue beyond a muscle in round or flattened tendons; a means of insertion or origin of a flat muscle.