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.

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Definitions:

Key Performance Indicators

Quantitative metrics used to gauge the performance level of various functions and processes in achieving business objectives.

Business

The activity of making, buying, or selling goods or services in exchange for money.

Enterprise Resource Planning

This is a type of software that organizations use to manage day-to-day business activities such as accounting, procurement, project management, and supply chain operations.

Consistent Processes

The establishment and maintenance of uniform procedures and methodologies throughout an organization to ensure efficiency and quality.