TERM 1
Who needs Financial Statement Information?
What are their responsibilities?
DEFINITION 1
1) Management: fulfill management function 2) Creditors:
contracting role 3) Government: regulation role 4) (BOD)
Directors: governance role 5) Investors: valuation role
TERM 2
The Fraud Triangle
DEFINITION 2
Incentive: WHY? Opportunity: HOW? Character: WHO?
TERM 3
The Sarbanes-Oxley Act (SOX)
DEFINITION 3
A set of regulations passed by Congress in 2002 to improve
financial reporting and restore investor confidence. SEE
REGULATORY CHANGES IN PACKET SEE FINANCIAL
REPORTING CHANGES IN PACKET
TERM 4
What does a Comparative Financial
Statement do?
DEFINITION 4
A comparative format reveals changes over time, such as a
huge increase in cash or a decline in short-term investments.
It also reports numbers for two or more time periods.
TERM 5
Compare/Contrast Multistep Income
Statements
DEFINITION 5
-Net income is found the same way. -Different items are
included. You need to memorize the order as well as the
items.
