Answer
Dear Uncle Carlos,
Thank you for the financial statements that you sent me. I went through them and found weighty issues that I would like to bring to your attention. First, the statements are not relevant. The statements lack a predictive value. We cannot predict Neville's future performance based on this set of statements that lack benchmarks and past performances on which we should base our expectations. Besides, the statements lack a confirmatory value. We cannot access trends or confirm the company's profitability trends.
Second, the statements do not meet the attribute of faithful representation. The information supplied in the statements is not complete. Notes are lacking on how the figures provided were arrived at. The information does not uphold neutrality because it was prepared by the company's owners instead of an external and independent auditor. Also, the information in the statements has inherent errors, which could be attributed to the lack of sufficient details on how the company assets are depreciated, how inventory is evaluated and details of the company's current loan agreements.
Therefore, in my humble and sceptical opinion, you should not purchase Neville's debentures because you may lose your money.
Yours faithfully,
Accounting Student
Work Step by Step
Dear Uncle Carlos,
Thank you for the financial statements that you sent me. I went through them and found weighty issues that I would like to bring to your attention. First, the statements are not relevant. The statements lack a predictive value. We cannot predict Neville's future performance based on this set of statements that lack benchmarks and past performances on which we should base our expectations. Besides, the statements lack a confirmatory value. We cannot access trends or confirm the company's profitability trends.
Second, the statements do not meet the attribute of faithful representation. The information supplied in the statements is not complete. Notes are lacking on how the figures provided were arrived at. The information does not uphold neutrality because it was prepared by the company's owners instead of an external and independent auditor. Also, the information in the statements has inherent errors, which could be attributed to the lack of sufficient details on how the company assets are depreciated, how inventory is evaluated and details of the company's current loan agreements.
Therefore, in my humble and sceptical opinion, you should not purchase Neville's debentures because you may lose your money.
Yours faithfully,
Accounting Student
