Question 1: There are several possible objectives for general purpose financial reporting.

| March 17, 2019

Question 1: There are several possible objectives for general purpose financial reporting. Explain what these objectives might be, and which one you think best applies to Amazon’s financial reporting (based on the information in the case study). Make sure that you fully explain your answer
Question 2: From the case study, it appears that the CEO of Amazon, Jeff Bezos, might be receiving bonus company stock based on accounting outcomes (reported profit, for example, or share price performance). Let us assume for now that this is true. Would Jeff Bezos or Amazon’s shareholders prefer Amazon to use conservative accounting methods such as historical cost? Fully explain the likely preferences of both parties.

Question 3: Use Capital Markets Research (CMR) to explain the reaction of Amazon’s shareholders to Amazon’s earnings announcement.

Question 4: Explain how an Amazon investor might use heuristics to decide whether to buy, sell, or hold Amazon shares. To answer this, you should explain the various categories of heuristics available to the investor. 

Question 5: Critical theorists view accounting very differently to positive or normative theorists. Use critical theory to explain how Amazon uses accounting and accountants for its own purposes. 

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