Which of the Following Statements Is CORRECT

question 41

Multiple Choice

Which of the following statements is CORRECT?

• A)Assets other than cash are expected to produce cash over time, and the amounts of cash they eventually produce should be exactly the same as the amounts at which the assets are carried on the books.
• B)The primary reason the annual report is important in finance is that it is used by investors when they form expectations about the firm's future earnings and dividends, and the riskiness of those cash flows.
• C)The annual report is an internal document prepared by a firm's managers solely for the use of its creditors/lenders.
• D)The four most important financial statements provided in the annual report are the balance sheet, income statement, cash budget, and statement of stockholders' equity.
• E)Prior to the Enron scandal in the early 2000s, companies would put verbal information in their annual reports, along with the financial statements. That verbal information was often misleading, so today annual reports can contain only quantitative information: audited financial statements.

---

Definitions:

Par Value

This term describes the nominal or face value of a bond, stock, or coupon as stated by the issuer, often used in the context of bonds and shares.

Preferred Stock

a class of stock that typically provides dividends before dividends are distributed to common stockholders and may have priority over common stock in the event of liquidation.

Common Stock

Equity ownership in a corporation, with holders having a claim on the company’s profits in the form of dividends and voting rights in corporate governance.

No Par Value

Refers to shares issued without a stated face value, with their selling price determined by the issuing company.