Please highlight answers.

1. Financial statements and reports What happened to assets, earnings, dividends, and cash flows during the financial year? Accounting 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 Statement or Report Description Gives details about the firm's sales, costs, and profits for the past accounting period. Details changes in the capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. Provides details about the flow of funds from operating, investing, and financing activities. Summarizes a company's assets, liabilities, and stockholders' equity at a specific point in time. Is published once a year and provides stockholders with details about the company's performance and financial condition. Accountants focus on creating financial statements, whereas finance professionals use these statements to evaluate a firm and answer questions about its performance. Indicate which financial statement you would refer to when answering the questions in the following table: Income Statement Statement of Retained Earnings How profitable has the firm been? How much of the firm's earnings are left as balance after the firm pays out dividends to its shareholders? If compensation for senior management is based on short-term performance of the firm, in the short run the firm is likely to: overstate its earnings. understate its earnings