Which of the Following Statements Is CORRECT

question 56

Multiple Choice

Which of the following statements is CORRECT?

• A) The income statement for a given year, say 2012, is designed to give us an idea of how much the firm earned during that year.
• B) The focal point of the income statement is the cash account, because that account cannot be manipulated by "accounting tricks."
• C) The reported income of two otherwise identical firms cannot be manipulated by different accounting procedures provided the firms follow Generally Accepted Accounting Principles (GAAP).
• D) The reported income of two otherwise identical firms must be identical if the firms are publicly owned, provided they follow procedures that are permitted by the Securities and Exchange Commission (SEC).
• E) If a firm follows Generally Accepted Accounting Principles (GAAP), then its reported net income will be identical to its reported net cash flow.

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Definitions:

Situational Approach

Characteristics of the organizational setting influence people’s attitudes and behaviour.

Personality Characteristics

Enduring traits or qualities that describe an individual's typical behaviors and attitudes.

Activation Theory

A theory suggesting that effectiveness in activities and performance can be enhanced through the arousal or activation of the central nervous system.

Personality Traits

Enduring characteristics that describe an individual's behavior, such as extroversion, agreeableness, and conscientiousness.