chapter 1: notes to financial statements Flashcards
1
Q
why should All financial statements should be accompanied by notes?
A
provide extra info about financial condition of company
allows financial statements to be fully understood
2
Q
what are the three types of notes?
A
Accounting rules used to prepare Financial Statements.
Additional detail for items in the F/S.
Additional information items NOT in the financial statements
(ex: risks).
These risks must be included in financial staments
3
Q
what does effective accounting communication mean
A
the recipient understands what the sender intends to convey
they must have understandability (by people who have basic understanding of accounting)
