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    Uses of Financial Statements

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    An officer of Carson Company recently commented that when he receives the firm's financial statements, he turns his attention to the bottom line of the income statement-the line that shows the net income or net loss for the period. He does not bother with the other financial statements, because, "it is only the bottom line that counts." Do you think this manager is correct in the way he uses the financial statements? Explain your response.


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    Solution Preview

    The manager is incorrect in the way he uses the statements. First, by looking at the Income Statement details, he can see how the company's revenues, cost of sales, and expenses are faring compared to past periods or compared to those of competitors, as well as if any items stick out as being unusually ...

    Solution Summary

    This solution discusses the uses of each of the basic financial statements.