Profession NO: 1

Your aunt recently received the annual report for a company in which she has invested. The report notes that the statements have been prepared in acco

Your aunt recently received the annual report for a company in which she has invested. The report notes that the statements have been prepared in accordance with “generally accepted accounting principles.”

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She has also heard that certain terms have special meanings in accounting relative to everyday use. Shewould like you to explain the meaning of terms she has come across related to accounting. Instructions

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Go to http://www.fasb.org and access the FASB Concepts Statements and respond to the following items.

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(Provide paragraph citations.) When you have accessed the documents, you can use the search tool in your Internet browser.

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(a) How is “materiality” defined in the conceptual framework?

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(b) The concepts statements provide several examples in which specific quantitative materiality guidelines are provided to firms. Identity at least two of these examples. Do you think the materiality guidelines should be quantified? Why or why not?

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(c) The concepts statements discuss the concept of “articulation” between financial statement elements.

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Briefly summarize the meaning of this term and how it relates to an entity’s financial statements.

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Snider Corporation, a publicly traded company, is preparing the interim financial data which it will issue to its shareholders at the end of the first

Snider Corporation, a publicly traded company, is preparing the interim financial data which it will issue to its shareholders at the end of the first quarter of the 2014–2015 fiscal year. Snider’s financial accounting department has compiled the following summarized revenue and expense data for the first quarter of the year. Sales revenue $60,000,000 Cost of goods sold 36,000,000 Variable selling expenses 1,000,000 Fixed selling expenses 3,000,000 Included in the fixed selling expenses was the single lump-sum payment of $2,000,000 for television advertisements for the entire year. Instructions (a) Snider Corporation must issue its quarterly financial statements in accordance with IFRS regarding interim financial reporting. (1) Explain whether Snider should report its operating results for the quarter as if the quarter were a separate reporting period in and of itself, or as if the quarter were an integral part of the annual reporting period. (2) State how the sales revenue, cost of goods sold, and fixed selling expenses would be reflected in Snider Corporation’s quarterly report prepared for the first quarter of the 2014–2015 fiscal year. Briefly justify your presentation. (b) What financial information, as a minimum, must Snider Corporation disclose to its shareholders in its quarterly reports?

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