How do the actions of CEOs and upper management affect accounting and financial reporting?

Expert Solution

The decisions of CEO and upper management have to do a lot with the accounting and Financial Reporting as the decisions taken by them have to be implemented throughout the company. The decisions can be related to certain things like expansion of business, change in the business model, implementation of some application softwares etc. Like if a decision is taken to expand a business, there can be introduced a new line of business which would require to be recognized as per a different type of provision of a GAAP required to be followed by the entity. To be specific if upper management of a manufacturing company decides to make an investment in some bonds which would yield some interest, it would require to recognize the interest even when it hasn't been received but became receivable. But revenue from sale of products would be recognized only when the amount is received by the entity. Therefore, the decisions taken by the CEO and the upper management affect the accounting and Financial Reporting of the company.

ekkarill92 answered 1 year ago

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