firm Chapter 2 11) What is the main reason that it is necessary for public companies to follow the rules and format set out in the Generally Accepted Accounting Principles (GAAP) when creating financial statements? A) It is easier to find specific information in such a report if it is laid out in a clear and consistent manner. B) It ensures that information on the performance of private companies is readily available to the public. C) It ensures that important information is not omitted and superfluous information is not included. D) It makes it easier to compare the financial results of different firms. E) To make sure they satisfy the auditor. 12) Which of the following best describes why firms produce financial statements? A) to use as a tool when planning future investments within the B) to provide a means of enticing new investors to a firm C) to provide interested parties, both inside and outside the company, with an overview of the short-and long-term financial condition of a business D) to show what activities the company has undertaken in the previous financial year, and what activities are planned for the near future E) to determine managerial performance 13) The third party who checks annual financial statements to ensure that they are prepared according to Generally Accepted Accounting Principles (GAAP) and verifies that the information reported is reliable is the A) TSX Enforcement Board. B) Accounting Standards Board, provincial securities commission D) auditor E) GAAP commission. 14) Which of the following amounts would be included on the right side of a statement of financial position? A) the value of government bonds held by the company B) the cash held by the company C) the amount of deferred tax liability held by the company D) the amount of money owed to the company by customers who have not yet paid for goods and services they have received E) the value of inventories held by the company 15) What is the role of an auditor in financial statement analysis