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#cfa-level-1 #reading-23-financial-reporting-mechanics
Question
An important first step in analyzing financial statements is identifying the [...] and [...] in an entity’s financial statements. (Found in MD&A)
Answer
types of accruals

valuation entries

Tags
#cfa-level-1 #reading-23-financial-reporting-mechanics
Question
An important first step in analyzing financial statements is identifying the [...] and [...] in an entity’s financial statements. (Found in MD&A)
Answer
?

Tags
#cfa-level-1 #reading-23-financial-reporting-mechanics
Question
An important first step in analyzing financial statements is identifying the [...] and [...] in an entity’s financial statements. (Found in MD&A)
Answer
types of accruals

valuation entries
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An important first step in analyzing financial statements is identifying the types of accruals and valuation entries in an entity’s financial statements. Most of these items will be noted in the critical accounting policies/estimates section of management’s discussion and analysi

Original toplevel document

7. USING FINANCIAL STATEMENTS IN SECURITY ANALYSIS
ions of balance sheet accounts. Accruals and valuation entries require considerable judgment and thus create many of the limitations of the accounting model. Judgments could prove wrong or, worse, be used for deliberate earnings manipulation. <span>An important first step in analyzing financial statements is identifying the types of accruals and valuation entries in an entity’s financial statements. Most of these items will be noted in the critical accounting policies/estimates section of management’s discussion and analysis (MD&A) and in the significant accounting policies footnote, both found in the annual report. Analysts should use this disclosure to identify the key accruals and valuations for a company. The analyst needs to be aware, as Example 4 shows, that the manipulation of earnings and a

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