FIN621 GDB Solution Spring 2017

Financial Statement Analysis (FIN621)

Correct recording of different journal entries and understating the nature of assets, liabilities, cash flows and equity are crucial factors in accounting and challenge for accountants. A minor mistake in understating the nature of an event may distort the overall financial position of the company.

You are required to identify the correct or incorrect statement from below given statements. You must briefly provide true nature of incorrect statements and explain briefly.

  1. If a company has positive income; it means company is solvent.

  2. Changing the accounting method of inventory does not appear in special/extra ordinary items.