Which of the Following Statements Is CORRECT

question 46

Multiple Choice

Which of the following statements is CORRECT?

• A) The focal point of the income statement is the cash account because that account cannot be manipulated by "accounting tricks."
• B) The reported income of two otherwise identical firms cannot be manipulated by different accounting procedures provided the firms follow generally accepted accounting principles (GAAP).
• C) 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).
• D) If a firm follows generally accepted accounting principles (GAAP),then its reported net income will be identical to its reported cash flow.
• E) The income statement for a given year is designed to give us an idea of how much the firm earned during that year.

---

Definitions:

Quality Improvement

A systematic approach to reducing or eliminating waste, errors, and defects in a production process or service operation, aimed at enhancing customer satisfaction.

Financial Accounting

The field of accounting concerned with the summary, analysis, and reporting of financial transactions related to a business, to external stakeholders.

Managerial Accounting

Managerial accounting involves the provision of financial and non-financial decision-making information to managers, focusing on the internal needs of a business.

Managerial Accounting

The process of identifying, measuring, analyzing, and communicating financial information to managers for the pursuit of an organization's goals.