Accounting practice in the United States follows the generally accepted accounting principles (GAAP) developed by the Financial Accounting Standards Board (FASB), which is a nongovernmental, professional standards body that monitors accounting practices and evaluates controversial issues. The Securities and Exchange Commission (SEC) requires all publicly traded companies to periodically report their financial information. A publicly held corporation must publish an annual report that contains the balance sheet, income statement, statement of cash flows, statement of stockholders' equity, and other financial information for analysis. The following table lists descriptions of the major financial statements and reports that a firm publishes. Identify the correct statement or report for each description. Description Provides details about the flow of funds from operating, investing, and financing activities. Explains the changes in a company's stockholders' equity over the accounting year. Summarizes a company's assets, liabilities, and stockholders' equity at a specific point in time. Is divided into two important parts: operating and non-operating sections; also known as the profit and loss statement. Is required by the SEC and includes the audited document that shows the company's financial results for the past year and management's discussion about the future outlook and plans. Statement or Report Balance sheet Annual report Statement of cash flows Statement of stockholders' equity Income statement
Accounting practice in the United States follows the generally accepted accounting principles (GAAP) developed by the Financial Accounting Standards Board (FASB), which is a nongovernmental, professional standards body that monitors accounting practices and evaluates controversial issues. The Securities and Exchange Commission (SEC) requires all publicly traded companies to periodically report their financial information. A publicly held corporation must publish an annual report that contains the balance sheet, income statement, statement of cash flows, statement of stockholders' equity, and other financial information for analysis. The following table lists descriptions of the major financial statements and reports that a firm publishes. Identify the correct statement or report for each description. Description Provides details about the flow of funds from operating, investing, and financing activities. Explains the changes in a company's stockholders' equity over the accounting year. Summarizes a company's assets, liabilities, and stockholders' equity at a specific point in time. Is divided into two important parts: operating and non-operating sections; also known as the profit and loss statement. Is required by the SEC and includes the audited document that shows the company's financial results for the past year and management's discussion about the future outlook and plans. Statement or Report Balance sheet Annual report Statement of cash flows Statement of stockholders' equity Income statement
Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter1: Quality Auditing: Why It Matters
Section: Chapter Questions
Problem 14RQSC
Related questions
Question
Transcribed Image Text:Accountants focus on creating financial statements, whereas finance professionals use these statements to evaluate a firm and answer questions
about its performance. Indicate which financial statement you would refer to when answering the questions in the following table:
Does the firm generate enough internal funds to support anticipated investment, or does additional
outside capital need to be raised?
Can the firm meet all its short-term obligations using its current assets?
O True
Balance
Sheet
O False
O
O
Statement of Cash
Flows
O
True or False: As long as the information reported follows the generally accepted accounting principles (GAAP) guidelines, accountants in a firm have
the liberty to use personal judgment to report transactions in the firm's financial statements.
O
Transcribed Image Text:Accounting practice in the United States follows the generally accepted accounting principles (GAAP) developed by the Financial Accounting Standards
Board (FASB), which is a nongovernmental, professional standards body that monitors accounting practices and evaluates controversial issues. The
Securities and Exchange Commission (SEC) requires all publicly traded companies to periodically report their financial information.
A publicly held corporation must publish an annual report that contains the balance sheet, income statement, statement of cash flows, statement of
stockholders' equity, and other financial information for analysis.
The following table lists descriptions of the major financial statements and reports that a firm publishes. Identify the correct statement or report for
each description.
Description
Provides details about the flow of funds from operating, investing, and financing activities.
Explains the changes in a company's stockholders' equity over the accounting year.
Summarizes a company's assets, liabilities, and stockholders' equity at a specific point in
time.
Is divided into two important parts: operating and non-operating sections; also known as
the profit and loss statement.
Is required by the SEC and includes the audited document that shows the company's
financial results for the past year and management's discussion about the future outlook
and plans.
Statement or Report
Balance sheet
Annual report
Does the firm generate enough internal funds to support anticipated investment, or does additional
outside capital need to be raised?
Statement of cash flows
Statement of stockholders' equity
Income statement
Accountants focus on creating financial statements, whereas finance professionals use these statements to evaluate a firm and answer questions
about its performance. Indicate which financial statement you would refer to when answering the questions in the following table:
Balance
Sheet
O
Statement of Cash
Flows
O
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