FIN1FSA Financial Statement Analysis

Topic 2

Q2 Evaluate accounting strategy of the company (The following questions can be used to evaluate accounting strategy: How do the company’s accounting policies compare to the norms in the industry? Do managers face strong incentives to use accounting discretion to manage earnings? Has the company changed any of its policies or estimates? What is the justification? Have the company’s policies and estimates been realistic in the past? Does the organization structure any significant business transactions so that it can achieve certain accounting objectives?)