A Potential Investor Interested in Evaluating a Company's Financial Earning

question 134

Multiple Choice

A potential investor interested in evaluating a company's financial earning performance for the current period would probably examine which of the following financial statements?

• A)Balance Sheet only
• B)Income Statement only
• C)Statement of Cash Flows and Income Statement
• D)Statement of Retained Earnings and Balance Sheet

---

Definitions:

Variance

The difference between planned (budgeted) and actual figures in financial and operational contexts, identifying discrepancies.

Standard Costs

Predetermined costs assigned to goods and services, used as benchmarks to measure performance by comparing them with actual costs.

Standard Costs

Predetermined cost estimates used for budgeting purposes and measuring performance, often seen as benchmarks for the actual costs of production.

Variance

The difference between planned, budgeted, or standard cost and actual cost in accounting.