1. Which of the following is most likely to be the role of financial reporting?
A. Provide information about a company’s performance, financial position, and changes in financial position that is useful to a wide range of users.
B. Use financial statements to evaluate the past, present, and future performance of the company for the purpose of making investment decisions.
C. Obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement.
2. Samantha Stoser is a financial analyst. She wishes to analyze the changes in the owners’ investment in the business over time. Which of the following financial statements is Stoser most likely to use for her analysis?
A. Statement of changes in equity.
B. Statement of comprehensive income.
C. Statement of financial position.
3. Artie Sorensen, an investment manager is explaining the responsibilities of an auditor for a publicly traded firm in the United States. Which of his statements is most accurate? The auditor:
A. assures the reader that the financial statements are free from error, fraud, or illegal acts.
B. must express an opinion about the effectiveness of the company’s internal control systems.
C. must state that he prepared the financial statements according to generally accepted accounting principles.
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