Proponents of the use of Fair Value Accounting (FVA) argue that the use of fair value reflects current market conditions. On the contrary, opponents of the FVA argue that under specific circumstances, such as a financial crisis, mark-to-market accounting may lead to considerable volatility in the financial statements and especially the Income Statement (Laux and Leuz, 2009). Critically discuss the merits and flaws of FVA in relation to cost accounting.  Recommended Reference  Laux, C., & Leuz, C. (2009). The crisis of fair-value accounting: Making sense of the recent debate. Accounting, organizations and society, 34(6-7), 826-834.

Using common-size balance sheet percentages to project individual assets, liabilities, or shareholders' equity has all of the following shortcomings except:  a. Individual assets, liabilities, and shareholders' equity are independent of each other.     b. The common-size percentages do not permit the analyst to easily change the assumptions about the future behavior of an individual asset or liability.     c. Individual assets, liabilities, and shareholders' equity are not independent of each other.     d. If a company experiences changing proportions for investments in securities among its assets, other asset categories may show decreasing percentages in some years even though their dollar amounts are increasing.

Recession, inflation, and high interest rates are economic events that are best characterized as being a. company-specific risk factors that can be diversified away. b. among the factors that are responsible for market risk. c. risks that are beyond the control of investors and thus should not be considered by security analysts or portfolio managers. d. irrelevant except to governmental authorities like the Federal Reserve. e. systematic risk factors that can be diversified away.

Which of the following statements is false?   A.   Internal controls are the processes by which the firm ensures that it presents accurate financial statements.   B.   Greenfield investments provide uncertain cash flows with high yields and high growth potential.   C.   Footnotes allow investors or any users to improve their assessments of the amount, timing, and uncertainty of the estimates reported in financial statements.   D.   Secondary markets are the markets in which existing, already outstanding securities are traded among investors.