Streeter & Sons is a regional service company that has been in business for a few years, but has not employed a controller or anyone else full-time to keep track of its financial state. The company needs to take a good look at its financial state to determine whether it needs to make any changes in its practices, in order to prevent possible financial meltdown. Which of the following, if true, would weaken the case that more than one type of financial statement should be examined in order to determine a company's financial health?
A) Nowadays, many companies burnish their balance sheet by claiming inflated figures for goodwill.
B) An income statement from one year may be radically different from the one for the previous year.
C) It can be difficult for auditors to independently verify certain figures in income statements.
D) The management by data trend has led companies to consider detailed and accurate financial statements imperative.
E) In times of recession, companies often reduce their accounting and financial management staffs.

Question

Quizplus · Accepted Answer

Option D weakens the case for examining more than one type of financial statement by suggesting that detailed and accurate financial statements (implying a single type could be sufficient) are considered imperative by companies, thus potentially undermining the argument for the necessity of multiple types of financial statements to assess financial health.

Streeter & Sons Is a Regional Service Company That Has