55. Explain what is meant by the critical approach to accounting and why it is important. 56. Armand Arsenault owns—that is, he is the sole shareholder of—and manages Arsenault Hardware (AH), a...

55. Explain what is meant by the critical approach to accounting and why it is important.

56. Armand Arsenault owns—that is, he is the sole shareholder of—and manages Arsenault Hardware (AH), a small chain of hardware stores. He has always used Joe Summers, an employee-bookkeeper to keep the records and prepare the financial statements. To date the only other one to ever see or use the financial statements was the tax department. The opportunity to buy the building where one of the stores operates has come up, and AH has approached the local bank for a loan. The bank has some questions about the preparation of the financial statements.


Required:


A) In this situation who is responsible for selecting the accounting policies used by AH?
B) Is it likely that the statements were prepared according to ASPE? Why or why not?
C) Define ASPE.
D) What other information might the bank want before making its decision?