Which of the Following Statements Is CORRECTσ

question 8

Multiple Choice

Which of the following statements is CORRECTσ

• A) the income statement for a given year 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:

Social Institution

An organized and established system of social behavior with a recognized purpose, such as family, education, religion, or government.

Economy

A social institution that determines how a society produces, distributes, and consumes goods and services.

Produces

Creates or manufactures goods or outcomes through a process of effort or operation.

Distributes

refers to the process of giving or delivering something to a number of recipients, spreading items or resources evenly or according to a plan.