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Limitations of Financial Reports p.323

Limitations of Financial Reports p.323. Limitations. Caution needs to be exercised when reading financial reports as there are some issues regarding how the data is collected and treated that you need to be aware of. Limitation 1] Normalised Earnings.

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Limitations of Financial Reports p.323

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  1. Limitations of Financial Reports p.323

  2. Limitations • Caution needs to be exercised when reading financial reports as there are some issues regarding how the data is collected and treated that you need to be aware of.

  3. Limitation 1] Normalised Earnings Is this activity normal? Should it be included? Ultimately its a judgement call to some degree.

  4. Limitation 2] Capitalising Expenses

  5. Limitation 2] Capitalising Expenses My god we just spent $30million on R&D!!! Don’t you mean we created an asset worth $30million! Accountants can do anything!

  6. Limitation 3] Valuing Assets

  7. Limitation 3] Valuing Assets The general idea is that you should not take the value of the assets as gospel. It is a product of a lot of estimation.

  8. Limitation 4] Timing Issues http://www.youtube.com/watch?v=_xIO731MAO4 56.38-59.30 - Timing fraud http://www.youtube.com/watch?v=_xIO731MAO4 50.38- 52.44 - Debt hiding

  9. Limitation 5] Debt Repayments Qantas debt....But what are the conditions associated? Who knows?

  10. Limitation 6] Notes to financials I love educating people about the accounting methods I used to create my financial statements! I get angry when investors say they don’t read my complex methods of determining figures.

  11. Do I really have to read these for homework sir?! • The notes to financial statements for Qantas go from page p55-p104 in their annual report....

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