There is usually a time-lag between the balance sheet date and the date of issuance of financial statements. After the balance sheet date, but before the issuance of financial statements, a FMCG company has been sued for poor quality of one of its food items. It is not certain whether the company will be fined for the quality issues as the case has just been filed. Previous examples of such cases show that FMCG companies are usually liable to pay heavy penalties if complaints filed against such firms for poor quality of food products are proven to be true. Which qualitative characteristics of financial statements should the company try to maintain while issuing its financial statements under these circumstances, and why? Which qualities should they consider sacrificing, and why? Justify your answer.
There is usually a time-lag between the
Which qualitative characteristics of financial statements should the company try to maintain while issuing its financial statements under these circumstances, and why? Which qualities should they consider sacrificing, and why? Justify your answer.
Step by step
Solved in 3 steps
