1.08 NOTES TO FS

Question 1

Managements Discussion & Analysis

Answer 1

a narrative written by management about the operations of the firm, its liquidity, capital resources, view of the firm’s financial condition, etc.

important disclosure; required by public companies

Question 2

GAAP requires information about risks and uncertainties to be disclosed that

Answer 2

could materially affect the financial statement amounts within one year of the date the financial statements are issued

Question 3

Nature of Operations

Answer 3

description of major products and services and their principal markets and locations

Question 4

Use of Estimate must be

Answer 4

communicated that the estimates are inescapable, result in approximate amounts, involve assumptions about future events

Question 5

Included in summary of significant accounting policies

Answer 5

Revenue recognition policy, inventory costing system, depreciation method, long term contract accounting, classification of investments, basis of consolidation