Since External Users of Financial Statements Have No Way to Verify

question 64

Multiple Choice

Since external users of financial statements have no way to verify the reported information,

• A)they cannot make informed decisions from financial information.
• B)FASB provides consequences to companies who distribute false managerial accounting reports to outsiders.
• C)GAAP provides a level of protection or assurance that the reports will follow certain standards.
• D)internal reports are provided to them by management.

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Definitions:

Exercise Price

The price stated in the option contract at which the security can be bought (or sold). Also called the strike price.

Common Stock

A form of corporate equity ownership, representing a claim on a portion of the company's profits and a right to vote on management decisions.

Warrants

Financial derivatives that give the holder the right, but not the obligation, to buy or sell a security at a predetermined price before a specific date.

Convertibles

Convertibles are bonds or preferred stocks that can be converted into a predetermined number of common stock or equity shares.