Ethical Obligations and Decision-Making in Accounting 2nd Edition by Steven Mintz, Roselyn Morris

Exercise 1

In Arthur Levitt’s speech that was referred to in the opening quote he also said: “…I fear that we are witnessing an erosion in the quality of earnings, and therefore, the quality of financial reporting. Managing may be giving way to manipulation; Integrity may be losing out to illusion.” Explain what you think Levitt meant by this statement.

Step 1 of 2

Financial statement:

The financial statement is the statement of the company position at a particular time period.

Every company prepares four types of financial statement:

1. Income statement (Profit and loss statement)

2. Statements of owner’s equity

3. Balance Sheet

4. Cash flow statement.