Financial Statements Are an Organization's Primary Means of Financial Communication

question 225

True/False

Financial statements are an organization's primary means of financial communication and are the end result of a process, or a cycle, which begins with a business transaction like a sale.

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Definitions:

Return on Investment

A performance measure used to evaluate the efficiency or profitability of an investment, calculated as net profit divided by the cost of the investment.

Average Total Assets

A financial metric that represents the average value of all the assets owned by a company over a specific time period.

Operating Expenses

The costs associated with running a day-to-day business operation, excluding the cost of goods sold.

Residual Income

The income that remains after all personal debts and expenses have been paid, or in business, the net income after deducting cost of capital from operating profit.