How conservative the company’s reporting methods are

Reference no: EM131415526

The following information was taken from the annual report of Busytown Industries.

a. Compute Busytown's conservatism ratio, and comment on how conservative the company's reporting methods are.

b. Explain why the conservatism ratio provides a measure of the extent to which a company's financial accounting methods are conservative, and provide examples of accounting treatments that may increase or decrease the ratio.

Reference no: EM131415526

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