Please answer the following 5 multiple choice questions: 1. Which part of an ann
ID: 2465476 • Letter: P
Question
Please answer the following 5 multiple choice questions:
1. Which part of an annual report is audited by external auditors (an outside CPA firm)?
The Chairman of the Board’s letter to the stockholders
Management Discussion and Analysis section
The financial statements
All of the above
2. In which section of an annual report would you find explanations and details to support the numbers in the financial statements?
Management Discussion and Analysis section
Notes to the financial statements
Auditors’ Report
Chairman of the Board’s letter to the stockholders
3.
Which financial statement includes sections related to Operating Activities, Investing Activities, and Financing Activities?
Income Statement
Retained Earnings Statement
Balance Sheet
Statement of Cash Flows
4.
What is the difference between a trial balance and a balance sheet?
They are the same thing
A trial balance shows A = L + SE, while a balance sheet shows Dr = Cr
A trial balance shows Dr = Cr, while a balance sheet shows A = L + SE
A trial balance shows Rev – Exp = Net income, while a balance sheet shows A = L + SE
5.
In which financial statements will you find the Retained Earnings account?
Income Statement and Retained Earnings Statement
Retained Earnings Statement and Balance Sheet
Income Statement and Balance Sheet
Balance Sheet and Statement of Cash Flows
Thank you!
Explanation / Answer
1)Financial statements are audited by External auditor as the external auditor is responsible for expressing an opinion on financial statement bur the other two option in the question are related to the internal representation of the company's management to the shareholders.
2) Explanations and details to support the numbers in the financial statements would be found in Notes to account in annual report.
3)Statement of cash flow includes sections related to Operating, Investing, and Financing Activities.Cash flow statement is that part of financial statement which tells us about the company's cash flow position from the three activities.
4) A trial balance shows Dr = Cr, while a balance sheet shows A = L + SE.A trial balance is a statement which tells us all debits has an equal and corresponding credit while a balance sheet is a statement which tell us all asstes are sum total of liabilities + shareholders equity fund.
5)Retained Earnings account can be found in Retained Earnings Statement and Balancesheet.