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Problems

$6.$ The financial statement that presents a shareholder's residual claim on assets is the:

A$.$ balance sheet.

B$.$ income starement.

C$.$ cash flow statement.

$7.$ A company's profitability over a period of rime is best evaluared using the:

A$.$ balance sheer.

B$.$ income statement.

C$.$ cash flow statement.

$8.$ The income starement is best used to evaluare a company's:

A$.$ financial posirion.

B$.$ sources of cash flow:

C$.$ financial results from business acriv$$ities$.$

$9.$ Accounting policies. methods, and estimates used in preparing financial statements are most likely to be found in the:

A$.$ auditor's report.

B$.$ management commentary.

C$.$ notes to the financial statements.

$10.$ Information about management and director compensation are least likely to be found in the:

A$.$ auditor's report.

B$.$ proxy statement.

C$.$ notes to the financial statements.

$11.$ Information about a company's objectives, strategies, and significant risks are most likely to be found in the:

A$.$ auditor's report.

B$.$ management commentary.

C$.$ notes to the financial statements.

$12.$ Which of the following best describes why the notes that accompany the financial statements are required? The notes:

A$.$ permit flexibility in statement preparation.

B$.$ standardize financial reporting across companies.

C$.$ provide informacion necessary ro understand the financial statements.

$13.$ What type of audir opinion is preferred when analyzing financial statements?

A$.$ Qualified.

B$.$ Adverse.

C$.$ Unqualified.

$14.$ An auditor determines that a company's financial statements are prepared in accordance with applicable accounting standurds except wirh respect to inventory reporting. This exception is mest likely to result in an audit opinion that is:

A$.$ adverse.

B$.$ qualified.

C$.$ unqualified.

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