This question reviews some of the difficulties encountered in interpreting accounting numbers. a. Give four examples of

Question:

This question reviews some of the difficulties encountered in interpreting accounting numbers.

a. Give four examples of important assets, liabilities, or transactions which may not be shown on the company’s books.

b. How does investment in intangible assets, such as research and development, distort accounting ratios? Give at least two examples.

c. Explain the three ways in which accelerating inflation affects earnings and profitability ratios based on historical-cost accounting.

Intangible Assets
An intangible asset is a resource controlled by an entity without physical substance. Unlike other assets, an intangible asset has no physical existence and you cannot touch it.Types of Intangible Assets and ExamplesSome examples are patented...