Posted by Purplerose on .
What decisions do management make that is dependent on the balance sheet? the income statement? the statement of cash flows? the retained earnings statement?
Accountants want to honestly believe that management uses these reports to make decision, in fact, I have never known a single top manager to use these documents for an investment or operational decision. These statements are used to reflect what is going on, not to determine what is going on.
Your accounting instructor may have a differing view, so be cautious.