MGT 531

Student Declaration
I__________________________________ Registration No.__________________, hereby
declare that by attempting the paper for the course _________________________________,
I will not be involved in any kind of cheating/copying/plagiarizing in solving the short
questions based paper of Mid Term Examination Fall 2020. I take full responsibility of my
conduct. If I found involved in any kind of such activity of cheating/copying/plagiarizing,
then Institute reserves the right to take any disciplinary action against me.
Student Signature
Mid Exam / Fall 2020 (Paper Duration 24 hours)
(Online Assignment Based Question Paper)
Course No.: MGT-531 Course Title: Analysis of Financial Statements

Total Marks: 18 Date of Exams: 04-11-2020
Degree: BBA Semester: 7th Section: A
Marks
Q.No. 1 2 3 4 5 6 7 8 9 10 Obtained/
Total Marks
Marks
Obtaine
d
Total Marks in Words:
Name of the Teacher: Muhammad Imran Gill
Who taught the course: Signature of Teacher / Examiner:
To be filled by Student
Registration No.: Name:
(THEORETICAL/PRACTICAL EXAMINATION)
Answer the following questions.

Q.No.1. ‘‘I often paint fakes.’’
An art dealer bought a canvas signed ‘‘Picasso’’ and traveled all the way to Cannes to
discover whether it was genuine. Picasso was working in his studio. He cast a single look at the
canvas and said, ‘‘It’s a fake.’’ A few months later, the dealer bought another canvas signed
‘‘Picasso.’’ Again he traveled to Cannes, and again Picasso, after a single glance, grunted: ‘‘It’s a
fake.’’ ‘‘But cher maitre,’’ expostulated the dealer, ‘‘it so happens that I saw you with my own eyes
working on this very picture several years ago.’’ Picasso shrugged: ‘‘I often paint fakes.’’
(3 X 2 = 6)
Required
a. Assume that the accounting report was prepared using generally accepted accounting
principles. Does this imply that the report is exactly accurate? Discuss.
Answer: if report make after use of all accounting principles then the report must be accurate. Because
where a fraudulent activity or mistake will be involve there must be accounting rule break by the
person who make report. In audit, auditors verify all reports according to accounting principles if
report is accurate it will automatically justify on all accounting rules but if report will b any mistake it
will not justify on accounting rules.
b. In your opinion, do accountants paint fakes? Discuss.
Answer: yes accountants can paint fake some organization make painted reports to show the best
performance of company for stakeholders (shareholders, customers, suppliers) therefor the goodwill
of company remains stable but it never means the painted report meet all accounting rules because a
fake report always prepare after breaks of any accounting rule.
Q.No.2. Management’s Responsibility for Financial Reporting
Management is responsible for the integrity and objectivity of the financial information
included in this report. The financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America. Where necessary, the financial
statements reflect estimates based on management’s judgment.
Management has established and maintains a system of internal accounting and other controls
for the Company and its subsidiaries. This system and its established accounting procedures and
related controls are designed to provide reasonable assurance that assets are safeguarded, that the
books and records properly reflect all transactions, that policies and procedures are implemented by
qualified personnel, and that published financial statements are properly prepared and fairly
presented. The Company’s system of internal control is supported by widely communicated written
policies, including business conduct policies, which are designed to require all employees to maintain
high ethical standards in the conduct of Company affairs. Internal auditors continually review the
accounting and control system.
Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining an adequate system of internal
control over financial reporting. Management conducted an assessment of the Company’s internal
control over financial reporting based on the framework established by the Committee of Sponsoring
Organizations of the Treadway Commission in Internal Control—Integrated Framework. Based on the
assessment, management concluded that, as of December 31, 2008, the Company’s internal control
over financial reporting is effective.
Management’s assessment of the effectiveness of the Company’s internal control over
financial reporting as of December 31, 2008 excluded Aearo, which was acquired by the Company in
April 2008 in a purchase business combination. Aearo is a wholly-owned subsidiary of the Company
whose total assets and total net sales represented less than 10% of consolidated total assets and less
than 2% of consolidated net sales, respectively, of the Company as of and for the year ended
December 31, 2008. Companies are allowed to exclude acquisitions from their assessment of internal
control over financial reporting during the first year of an acquisition while integrating the acquired
company under guidelines established by the Securities and Exchange Commission.
The Company’s internal control over financial reporting as of December 31, 2008 has been
audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated
in their report which is included herein, which expresses an unqualified opinion on the effectiveness
of the Company’s internal control over financial reporting as of December 31, 2008.
(3 X 2 = 6)
Required
a. What is the role of the accountant (auditor) as to the financial statements?
Answer: A accountant reviews a company's financial statements, documents, data and accounting
entries. Financial auditors gather information from a company's financial reporting systems, account
balances, cash flow statements, income statements, balance sheets, tax returns and internal control
systems.
b. Accountants (auditors) are often included as defendants in lawsuits that relate to the
financial statements. Speculate as to why this is the case.
Answer:
Q.No.3. OUR PRINCIPAL ASSET IS OUR PEOPLE

Dana Corporation included the following in its 2001 financial report:
Foundation Business: Focused Excellence
Dana’s foundation businesses are: axles, drive shafts, structures, brake and chassis products,
fluid systems, filtration products, and bearing and sealing products.
These products hold strong market positions—number one or two in the markets they serve.
They provide value-added manufacturing, are technically advanced, and each has features that are
unique and patented.
Management Statement (in Part)
We believe people are Dana’s most important asset. The proper selection, training, and
development of our people as a means of ensuring that effective internal controls are fair, uniform
reporting are maintained as standard practice throughout the Company.
(3 X 2 = 6)
Required
a. Dana states that ‘‘We believe people are Dana’s most important asset.’’ Currently,
generally accepted accounting principles do not recognize people as an asset. Speculate
on why people are not considered to be an asset.
Answer: some time manpower consider as asset in organizations some time not but if a company
consider it a asset it can just consider it not show this in balance sheet of company. Because we can
not evaluate the workers when a worker joins he has low working capacity and accuracy but with the
passage of time its working power increase but wo can not define its skills in figures. Second thing
workers are haired by company not purchased buy company they are not the property of company.
company pay them against there skills so there for this is a expense for company not asset in
accounting terms.
b. Speculate on what concept of an asset Dana is considering when it states ‘‘We believe
people are Dana’s most important asset.’’
Answer: basically people are not asset there skills are asset when a person newly joins a company he
has not skills with time passage he learned from company and improve skills so basically company
system from which he learned is an asset and the skills of people's are an asset so Dana justify this as
a intangible asset because we can't evaluate the skills. We can't touch any body skills so it is an
intangible asset.

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Student Declaration

I________________ Registration No., hereby

declare that by attempting the paper for the course _________________________________,

I will not be involved in any kind of cheating/copying/plagiarizing in solving the short

conduct. If I found involved in any kind of such activity of cheating/copying/plagiarizing,

Course No.: MGT-531 Course Title: Analysis of Financial Statements

Registration No.: Name:

Answer the following questions.

Management’s Report on Internal Control over Financial Reporting

Q.No.3. OUR PRINCIPAL ASSET IS OUR PEOPLE

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