Ch7 DQ

1. Relevance and faithful representation are the qualitative characteristics of useful information under SFAC No. 8. ⁸⁸ How does ethical reasoning enter into making determinations about the relevance and faithful representation of financial information?
2. Comment on the statement that materiality is in the eye of the beholder. How does this statement relate to the discussion in this chapter of how to gauge materiality in assessing financial statement restatements? Is materiality inconsistent with the notion of representational faithfulness?
3. Comment on the statement that what a company's income statement reveals is interesting. but what it conceals is vital.
4. Why are non-GAAP financial measures used by many investors and analysts?
5. Do you agree with each of the following statements? Explain.

EBITDA makes companies with asset-heavy balance sheets look healthier than they may actually be.

EBITDA portrays a company's debt serviceability but only some types of debt.

EBITDA isn't a determinant of cash flow at all.