An Introduction

#cfa-level-1 #fra-introduction #study-session-7

The readings in this study session describe the general principles of financial reporting, underscoring the critical role of the analysis of financial reports in investment decision making.

The first reading introduces the range of information that is available to analyze the financial performance of a company, including the principal financial statements (the income statement, balance sheet, cash flow statement, and statement of changes in owners’ equity), notes to those statements, and management discussion and analysis of results. A general framework for addressing most financial statement analysis tasks is also presented.

A company’s financial statements are the end-products of a process for recording the business transactions of the company. The second reading illustrates this process, introducing such basic concepts as the accounting equation and accounting accruals.

The presentation of financial information to the public by a company must conform to applicable financial reporting standards based on factors such as the jurisdiction in which the information is released. The final reading in this study session explores the roles of financial reporting standard-setting bodies and regulatory authorities. The International Accounting Standards Board’s conceptual framework and the movement towards global convergence of financial reporting standards are also described.


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