Quiz – Which of the following statements is CORRECT?

Fundamentals of Financial Management, Concise, 9e & 10e by Brigham and Houston


Which of the following statements is CORRECT?
a. Assets other than cash are expected to generate cash over time, and the amounts they eventually produce should be precisely the same as the amounts on the books.
b. The primary reason the annual report is important in finance is that it is used by investors when they form expectations about the firm's future earnings and dividends, and the riskiness of those cash flows.
c. The annual report is an internal file prepared solely for the use of its creditors/lenders.
d. The four financial statements found in the annual report are the balance sheet, income statement, cash budget, and statement of stockholders' equity.
e. Before the Enron scandal, firms would put verbal information into their annual reports. This verbal information was often misleading, and so nowadays the annual reports can contain only quantitative information from audited financial statements.

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