Which of the Following Statements Concerning the Notes to the Financial

question 20

Multiple Choice

Which of the following statements concerning the notes to the financial statements is true?

• A) The notes to the financial statements are an integral part of the basic financial statements.
• B) The notes to the financial statements are considered to be required supplementary information.
• C) The auditor's opinion generally does not extend to the notes to the financial statements.
• D) The notes support the basic financial statements, management's discussion and analysis, and other required supplementary information.

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Definitions:

Economic Profits

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs.

Accounting Profits

The net income for a company after all expenses have been deducted from revenues, according to generally accepted accounting principles.

Implicit Costs

The opportunity costs of using resources owned by the company for its own operations, rather than earning income elsewhere.

Explicit Costs

Direct payments made to others in the course of running a business, such as wages, rent, and materials.