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

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.

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