Which of the Following Statements Best Defines Financial Statements

question 131

Multiple Choice

Which of the following statements best defines financial statements?

• A) Financial statements are the information systems that record monetary and nonmonetary business transactions.
• B) Financial statements are the verbal statements made to business news organizations by chief financial officers.
• C) Financial statements are business documents that report on a business in monetary terms, providing information to help users make informed business decisions.
• D) Financial statements are plans and forecasts for future time periods based on information from past financial periods.

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Definitions:

Adjusting Entry

An update to the books of accounts to allocate incomes and expenses to the appropriate accounting period.

Fiscal Period

Refers to any period used for accounting purposes, typically a year, which can either align with the calendar year or be a different 12-month period.

Insurance

A financial product sold by insurance companies to safeguard against financial losses from specific risks, such as accidents, theft, or natural disasters.

Adjusting Entry

An accounting entry made in the journals at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred.