Quiz – Which of the following statements is CORRECT?


Which of the following statements is CORRECT?
a. The main point of the income statement is the cash account. This is important because that account cannot be manipulated by “accounting tricks.”
b. The income reported by two identical firms cannot be manipulated by different accounting procedures given that the firms follow GAAP.
c. The income reported by two identical firms must be identical if the firms are publicly owned, given that they follow procedures that are allowed by the SEC.
d. If a corporation follows generally accepted accounting principles (GAAP), then its net income will be the same as the cash flow it reports.
e. The income statement for a given year is designed to give us an idea of how much the firm earned during that year.

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