6.Frank Smithson, chief operating officer for Star Master Corporation, has discovered that two separate and distinct sets of financial statements are being provided—one to the Internal Revenue Service...

6.Frank Smithson, chief operating officer for Star Master Corporation, has discovered that two separate and distinct sets of financial statements are being provided—one to the Internal Revenue Service and the other to its shareholders. He objected to this policy and is insisting that one set of financial statements be provided to all interested parties. Provide examples of the needs of the two parties.

7.Describe the two components of the income statement.

8.Why must managers understand financial reporting?

9.What information is provided in a management letter? Who signs it?

10.What powers does the Securities and Exchange Commission have?

11.What are the two fundamental economic reasons why investors and creditors demand financial accounting information?

12.What methods of controlling the ethical decisions by managers are common? Why are these methods necessary?