Financial Statements Are Prepared After an Entity's Transactions Are Analyzed

question 30

Multiple Choice

Financial statements are prepared after an entity's transactions are analyzed and recorded.Which of the following reports is one of the required financial statements?

• A) Statement of cash flows
• B) Statement of return on assets
• C) Statement of expenditures
• D) Expense statement

---

Definitions:

Prepaid Expenses

Payments made in advance for goods or services to be received in the future, recorded as assets on the balance sheet until they are consumed or used.

Indirect Method

A method of presenting the operating activities section of the statement of cash flows that adjusts net income to compute cash flows from operating activities.

Net Income

The net income of a company, which is the remaining amount of total revenue after deducting all expenses and taxes.

Inventory

The total amount of goods and materials held by a company intended for sale or production.