The FASB Stresses That the Primary Objective of Financial Reporting

question 59

Multiple Choice

The FASB stresses that the primary objective of financial reporting is to provide information useful to investors and creditors in assessing the amount,timing,and uncertainty of future net cash flows.The FASB contends that

• A)users pay attention to firms' accounting earnings because this accrual measure of periodic firm performance improves their ability to forecast companies' future cash flows.
• B)information about current cash receipts and payments is the most pertinent for this task.
• C)users pay attention to managements' estimates of free cash flows because this information improves their ability to forecast companies' future cash flows.
• D)current cash flows outperform current earnings in predicting future cash flows.

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Definitions:

API Diesel Engine Oil

A type of engine oil that meets the performance standards set by the American Petroleum Institute (API) for diesel engines.

Diesel Particulate Filter (DPF)

A component in diesel engine exhaust systems that captures and stores exhaust soot to reduce emissions of particulate matter.

OEMs

Original Equipment Manufacturers; companies that produce parts and equipment that may be marketed by another manufacturer.

Aftermarket Diesel Fuel Conditioners

Products added to diesel fuel to improve engine performance, fuel efficiency, and reduce emissions.