Answer to Question #236380 in Economics for Josef

Question

The accountant of Fauntleroy Ltd is preparing financial statements for the current year end

but is struggling to establish which information is more important. He has a shortlist of

questions which need to be solved:

(a) In preparing the description of a very complex transaction he has two options:

(i)

To use information from a close friend who holds shares in the company: the

information prepared by his friend is somewhat biased but is very clear and

concise; or

(ii)

To use the information prepared by an independent analyst: this information is

complex to the average person

Which piece of information is more appropriate for use in the financial statements? (7 marks)

Answer 1

Information prepared by an independent analyst is more appropriate for use in the financial statements, because this information is complex to the average person, and objective point of view is appropriate.