Accounting practice in the United States follows the generally accepted accounting principles (GAAP) developed by the Financial Accounting Standards Board (FASB), which is a nongovernmental, professional standards body that monitors accounting practices and evaluates controversial issues. The Securities and Exchange Commission (SEC) requires all publicly traded companies to periodically report their financial information. A publicly held corporation must publish an annual report that contains the balance sheet, income statement, statement of cash flows, statement of retained earnings, and other financial information for analysis. The following table lists descriptions of the major financial statements and reports that a firm publishes. Identify the correct statement or report for each description. Description Statement or Report Is issued once a year by a corporation and contains basic Annual financial statements and an analysis of past performance and future prospects Aggregates all cash inflows, which the company receives from Balance sheet its ongoing activities and investment sources, and all cash outflows Provides a quantitative summary of a company’s assets, liabilities, and net worth at a specific point in time Reconciles (1) the amount of retained earnings recorded at the L aaaaaaaaaaaaaaa beginning of the reporting period, (2) changes during that period, and (3) the amount of retained earnings at the end of the reporting period Gives details about the firm’s sales costs, and profits for the Income statement past accounting period Accountants focus on creating financial statements, whereas finance professionals use these statements to evaluate a firm and answer questions about its performance. Indicate which financial statement you would refer to when answering the questions in the following table. Income statement Statement of Retained Earnings How profitable has the firm been?
