When conducting a financial analysis of a firm, financial analysts: A. cannot use accounting information as it is historical. B. rely solely on accounting information. C. frequently use accounting information. D. ignore accounting information but do use marketing information. O E. assume the future will be a repeat of the past as reflected in the firm's accounting reports.

81) Inadequacies of the existing system of financial ratios signify a need for a different approach to monitoring business performance. Of the following statements, which is NOT a shortcoming of financial ratios? a) financial measures are lagging indicators of business performance. b) financial ratios have a short-term orientation and emphasize the cash flow rather than the processes that contribute to cash flow. c) Financial ratios focus equally on the stockholders as on the customers, suppliers and employees. d) A and B e) A and B and C

Managerial accounting focuses on historical information while financial accounting focuses on the future and making projections. TRUE FALSE

Accounting concepts form the fundamental principles upon which financial accounting is based. These concepts provide a framework for recording, reporting, and interpreting financial transactions in a consistent and meaningful manner. One of the key accounting concepts is the principle of conservatism, which dictates that when faced with uncertainty, accountants should err on the side of caution by recognizing potential losses immediately while delaying the recognition of potential gains until they are realized. This concept ensures that financial statements provide users with a reliable representation of an entity's financial position and performance, even in the face of uncertainty   Question:   How does the principle of conservatism contribute to the reliability of financial statements?