New accounting standards and the small business: the focus is different for a small business

A paper explores whether the balance sheet of the income statement is more important for the small business. Some FASB pronouncements permit alternative accounting choices that impact the balance sheet and income statement differently. The paper surveys how lending officers assess the credit worthin...

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Bibliographic Details
Published in:The CPA journal (1975) 1997-07, Vol.67 (7), p.22
Main Authors: Ivancevich, Daniel M, Ivancevich, Susan H, Cocco, Anthony, Hermanson, Roger H
Format: Article
Language:English
Subjects:
Accounting
Accounting and auditing
Accounting policies
Audited financial statements
Balance sheets
Comparative analysis
Compensation
Corporation reports
Current liabilities
Deferred income (Business)
Earnings per share
Employees
FASB statements
Financial accounting standards
Financial reporting
Financial statements
Investments
Liability
Net income
Public companies
Questionnaires
SFAS 106
Small business
Surveys
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Summary:A paper explores whether the balance sheet of the income statement is more important for the small business. Some FASB pronouncements permit alternative accounting choices that impact the balance sheet and income statement differently. The paper surveys how lending officers assess the credit worthiness of 2 sets of companies. At issue is the adoption of SFAS 106 and whether the companies took the full one-time catch up charge or accrued for it ratably over some future period. The first group of financials that lending officers were asked to assess were those of companies that chose to record the 1-time full provision and liability. The 2nd group was of financial statements of companies that chose to defer and spread the liability. The lending officers reported different conclusions depending on the approach the companies chose. Yet there is no real difference between the 2 groups of financials.
ISSN:0732-8435