Instructions: Please, respond to the below two cases and include at least 2 references (citation). This assignment should be about 2 pages total (around 500 words including only the answers.) CASE 6-2...

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Please, respond to the attached two cases and include at least 2 references (citation). This assignment should be about 2 pages total (around 500 words including only the answers.)




Instructions: Please, respond to the below two cases and include at least 2 references (citation). This assignment should be about 2 pages total (around 500 words including only the answers.) CASE 6-2 Objectives of Financial Statements Discuss how a company’s primary financial statements are useful to potential investors who are trying to decide whether to buy stock in the company. Support your discussion by citing objectives outlined in the Conceptual Framework. CASE 6-3 Income Statement Format Accountants have advocated two types of income statements based on differing views of the concept of income: the current operating performance and all‐inclusive concepts of income. Required: a. Discuss the general nature of these two concepts of income. b. How would the following items be handled under each concept? i. Cost of goods sold ii. Selling expenses iii. Prior period adjustments
Answered Same DayJun 05, 2021

Answer To: Instructions: Please, respond to the below two cases and include at least 2 references (citation)....

Khushboo answered on Jun 07 2021
150 Votes
Case 6-2
The main objective of financial statements is to provide the useful information to the users of financial statemen
ts about financial position and financial performance of an entity. The useful information is used for the decision-making of the users of financial statements. The potential investors use the financial statements to access the viability of the company for the investment purpose. The potential investors can analyze the dividend history of the company and can predict the future dividend income on their investments based on past trends and performance. Further the potential investors can also analyze the risk associated with the investment from the financial statements. For example, the volatility in profitability shows higher risk. The potential investors analyze various elements in financial statements such as revenue, net profit, margins, cash flows from operations, financing and investing activities, free cash flows, financial positions and ratios such as liquidity ratios, solvency ratios, efficiency ratios, profitability ratio etc. and after analyzing all the information mentioned in financial statements take their decision to invest in the company’s shares (Dennis Najjar 2019).
The objective of...
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