Financial statements are helpful to predict the future performance of a company for all of the following reasons except _____.
A)the evaluation of management's past performance gives clues to its ability to generate future returns
B)the assets and liabilities of a company provide clues to a company's future prospects
C)financial statements are required to give formal projections of management's assessment of the next period's financial results
D)past performance is often a good indicator of future performance

Question

Quizplus · Accepted Answer

Financial statements do not provide formal projections of management's assessment of the next period's financial results, as that would be considered a forward-looking statement and is typically not included in financial statements. Financial statements provide information on the company's past performance and current financial position, which can be used to make informed predictions about future performance, but they do not formally project future results.

Financial Statements Are Helpful to Predict the Future Performance of a Company