MGT220H5 Study Guide - Final Guide: International Financial Reporting Standards, International Accounting Standards Board, Cash Flow Statement
13 May 2017
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Chapter 1: the canadian financial reporting environment: explain how accounting makes it possible to use scarce resources more efficiently. Accounting provides reliable, relevant, and timely information to managers, investors, and creditors so that resources are allocated to the most efficient enterprises. Accounting also provides measurements of efficiency (profitability) and financial soundness: explain the meaning of (cid:373)stakeholder(cid:374) and identify key stakeholders in financial reporting, explaining what is at stake for each one. Investors, creditors, management, securities commissions, stock exchanges, analysts, credit rating agencies, auditors, and standard setters are some of the major stakeholders: identify the objective of financial reporting. Ideally, all stakeholders should have access to the same information in order to ensure that good decisions are made in the capital marketplace. (this is known as information symmetry. ) However, this is not the case(cid:367)there is often information asymmetry. Of necessity, management has access to more information so that it can run the company.
