七 Investment Tools Financial Statement Analysis Basic Concepts.docVIP

七 Investment Tools: Financial Statement Analysis: Basic Concepts 1.A: Preliminary Reading Measuring Business Income a: Explain why financial statements are prepared at the end of the regular accounting period, why accounts must be adjusted at the end of each period, and why the accrual basis of accounting produces more useful income statements balance sheets than the cash basis. To be relevant, information must be reliable. This means information must be consistent and comparable over time and be provided on a timely basis. According to the relevancy principle, a firm needs to identify