Page 32 - FINAL CFA I SLIDES JUNE 2019 DAY 9
P. 32
LOS 32.c: Distinguish between conservative Session Unit 9:
and aggressive accounting., p.307 32. Financial Reporting Quality
Conservative accounting can be GAAP/IFRS-compliant choices that tend to decrease reported earnings and
financial position for the current period; Aggressive accounting tend to increase reported earnings and
financial position. Both are biases (deviation from neutrality –so neither good nor bad) designed to secure
earnings smoothing as greater earnings volatility tends to reduce the value of a company’s shares.
tanties
Minimal
Disclosure too?
Conservative & Aggressive accounting also encouraged by GAAP:
Which is better if forced
Research costs expensed now and Revenue recognition only latter! to choose? Why?
