ACCT 7021 : ACCT 7021 Midterm Study Guide
Document Summary
1494 luca paciolo method of venice income and capital. Describe the market meltdown (2007-08), fundamental questions and solutions, and what is relevant to accountants: setup. If so, to what extent: solutions, limit compensation of management in companies that encouraged off bs financing, fs did not accurately reflect true value because left off siv debt and guarantees. Why is conservatism desired: definition gains/losses, ex: inventories and capital assets hc unless decline in value below cost (then lcm, avoids legal/reputation consequences of aggressive accounting. What information does the b/s and i/s convey: assumptions, future cash flows & interest rate are publicly known and certain. I. e. no information asymmetry & no uncertainty: basis of accounting, pv (assets are pv of future cf) Income recognition: as changes in pv occur, bs and is, bs gives info to calculate accretion of discount, which is ni under perfect conditions.
