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    Financial Statements: Example Problems

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    I need help with the following questions:

    #1 What are the qualitative and quantitative limitations of financial statements?

    What is the FASB and what role does that entity play?

    #2 About twenty years ago business educators articulated that the goal of financial management was to maximize shareholder wealth. In today's financial community, and especially the academic community, that view is not fully accepted. What has changed?

    Do financial managers really maximize stockholders' value?

    #3 What are some ethical considerations of accounting and finance? If you follow all applicable rules and regulations, are you an ethical person?

    Why do many business managers feel that ethical behavior is essential to the profitability and survival of their firm?

    #4 What information does a company's cash flow statement provide that is not available from the other financial statements? Be specific and cite an example.

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    Solution Preview

    #1 What are the qualitative and quantitative limitations of financial statements?

    One of the qualitative limitations of financial statements is that it measures business transactions with financial implications only. For example, it doesn't value human resources into it in spite of the fact that everyone is claiming that people make or break a business.

    A quantitative limitation is that financial statements are historical numbers, they rarely adjust items to their current (or market) value.

    What is the FASB and what role does that entity play?

    FASB is the Financial Accounting Standards Board and as the name implies it sets, which means promulgate and implement, the generally accepted accounting principles for private and public ...

    Solution Summary

    This solution provides assistance with the questions involving financial statements.

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