Streeter & Sons Is a Regional Service Company That Has

question 70

Multiple Choice

Streeter & Sons is a regional service company that has been in business for a few years, but has not employed a controller or anyone else full-time to keep track of its financial state. The company needs to take a good look at its financial state to determine whether it needs to make any changes in its practices, in order to prevent possible financial meltdown. Which of the following, if true, would weaken the case that more than one type of financial statement should be examined in order to determine a company's financial health?

• A) Nowadays, many companies burnish their balance sheet by claiming inflated figures for goodwill.
• B) An income statement from one year may be radically different from the one for the previous year.
• C) It can be difficult for auditors to independently verify certain figures in income statements.
• D) The management by data trend has led companies to consider detailed and accurate financial statements imperative.
• E) In times of recession, companies often reduce their accounting and financial management staffs.

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Definitions:

Negotiators

Individuals who engage in discussions with the aim of reaching an agreement or resolving a dispute between parties.

Explanations

Statements or reasons given to justify actions or make something clear.

Interpretation

The act of explaining or understanding the meaning of something, typically involving a degree of personal judgment or perspective.

Stimuli

External events or occurrences that elicit responses or reactions from an organism or system.