Which of the Following Statements Is CORRECT

question 77

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 the 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.

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Definitions:

Breach of Contract

A violation of any of the agreed-upon terms and conditions of a binding contract.

Co-Insurance Clause

A clause that may be inserted in an insurance policy that renders the insured an insurer for a part of the loss if the insured fails to maintain insurance coverage of not less than a specified minimum amount or percentage of the value of a property.

Indemnity

A contractual promise to compensate for loss or damage incurred by the promisee.

Property Worth

The market value of an asset or property, determined by factors such as location, condition, and market trends.