Which of the following statements is CORRECT?
A) The statement of cash needs tells us how much cash the firm will require during some future period, generally a month or a year.
B) The four most important financial statements provided in the annual report are the balance sheet, income statement, cash budget, and the statement of stockholders' equity.
C) The balance sheet gives us a picture of the firm's financial position at a point in time.
D) The income statement gives us a picture of the firm's financial position at a point in time.
E) The statement of cash flows tells us how much cash the firm has in the form of currency and demand deposits.

Question

Quizplus · Accepted Answer

The balance sheet is a snapshot of the firm's financial position at a point in time, showing assets, liabilities, and stockholders' equity. The statement of cash needs (not cash budget) is an internal management tool that forecasts a firm's cash inflows and outflows for a future period. The four most important financial statements are the balance sheet, income statement, statement of cash flows, and statement of stockholders' equity. The income statement shows a firm's financial performance over a period of time, not its financial position at a point in time. The statement of cash flows shows the sources and uses of cash during a period, but does not necessarily indicate how much cash a firm has in the form of currency and demand deposits.

Which of the Following Statements Is CORRECT