1. Financial statements and reports What happened to assets, earnings, dividends, and cash flows during the financial year? Acounting practice in the United States follows the generally accepted accounting principles (GAAP) developed by the Financial Accounting Standards Board (FASB), which is a nongovernmental, professional standards body that monitors accounting practices and evaluates controversial issues. The Securities and Exchange Commission (SEC) requires all publicly traded companies to periodically report their financial information. A publicly held corporation must publish an annual report that contains the balance sheet, income statement, statement of cash flows, statement of retained earnings, and other financial information for analysis. The following table lists descriptions of the major financial statements and reports that a firm publishes. Identify the correct statement or report for each description Description Statement or Report Is issued once a year by a corporation and contains basic financial statements and an analysis of past performance and future prospects Provides a quantitative summary of a company's assets, liabilities, and net worth at a specific point in time Details changes in the capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings D Gives details about the firm's sales, costs, and profits for the past a period Gives details about the company's cash at the beginning of the year and what is left at the end of the year, including some details about where cash was generated and where it was used during the course of the year Accountants focus on creating financial statements, whereas finance professionals mostly use these statements to evaluate a firm and answer questions about its performance. Indicate which financial statement would be the most Gives details about the firm's sales, costs, and profits for the past accounting period Gives details about the company's cash at the beginning of the year and what is left at the end of the year, including some details about where cash was generated and where it was used during the course of the year [ Accountants focus on creating financial statements, whereas finance professionals mostly use these statements to evaluate a firm and answer questions about its performance. Indicate which financial statement would be the most helpful in answering the questions in the following table: Balance Sheet Statement of Cash Flow How much cash is a firm generating through operating, investing, and financing activities? How much debt and equity has the firm issued to finance its assets?O True or False: As long as the information reported follows the generally accepted accounting principles (GAAP) guidelines, accountants in a firm have the liberty to use personal judgment to report transactions in the firm's financial statements. O True O False
