Preparing Decision Useful Financial Reports: A Challenge for Small Businesses*


  • Larry G. Singleton The George Washington University
  • Bruce Swindle McNeese State University


Small business owners and managers want financial reports which are  useful for their own decision-making purposes as well as for fairly presenting  their business to others. Accountants and auditors consistently state that financial reports are the product of management. These statements being true, small business administrators should know what constitutes fair and useful financial  presentation  and how to achieve those characteristics.

Accounting offers many alternatives for the treatment of financial events ( e.g., FIFO/UFO; Straight-line/ Declining Balance ). Alternatives are available in order to allow management most fairly and most usefully to present its financial  reports. The characteristics  which contribute  to the decision usefulness of accounting information has been provided by the Financial Accounting Standards Board ( FASB ). and the FASB expects these characteristics to be considered in all financial statement preparations.  However, the FASH has given no guidance for  the consideration of the characteristics.

This paper  offers small business administrators a rational process for  systematically choosing between  accounting  alternative  methods.  The procedure   is easy  to understand  and  simple  to execute. It  incorporates and utilizes the characteristics  which the FASB  states contribute  to the decision  usefulness of accounting  information.


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