Question

What is the approach suggested by the Special Committee on Financial Reporting regarding forecast financial statements?

A) Management should provide detailed forecast financial statements
B) Management should not provide any forecast information
C) Management should provide information that helps users forecast for themselves
D) Management should create forecast financial statements based on user requests

Answer 1

The Special Committee on Financial Reporting recommends that management provide information aiding users in making their own financial forecasts, rather than providing detailed forecast financial statements themselves.

Step-by-step explanation:

The approach suggested by the Special Committee on Financial Reporting regarding forecast financial statements is C) Management should provide information that helps users forecast for themselves. This approach implies that management is encouraged to disclose sufficient information and discussion of the business's operations, strategies, and risks to aid users in making their own forecasts and projections. The committee does not suggest that management should provide detailed forecast financial statements themselves, as the creation of such statements can imply a level of precision that is not always possible and may carry legal implications.