QUIZ 2

Question 1

A key component of MD&A called risk factors and challenges compares results with previous periods and expalins significant changes

Answer 1

False (financial performance analysis)

Question 2

By analyzing audit reports, investors and creditors can make better financial decisions and reduce risks associated with unreliable financial information

Answer 2

True

Question 3

A key purpose of MD&A is to highlight risks & challenges by helping stakeholders make informed decisions based on management’s insights.”

Answer 3

False (ensure transparency for investors and analysts)

Question 4

Audit Report is an official document prepared by an independent auditor after reviewing a company’s financial statements.

Answer 4

TRUE

Question 5

A purpose of an Audit Report states that it Builds Investor Investor Confidence which means it verifies that the company adheres to regulatory and accounting standards.”

Answer 5

False (ensure complaince)

Question 6

Management’s Discussion and Analysis is a section of a company’s financial report where management provides an overview of the company’s financial performance, business operations, risks, and future outlook.

Answer 6

TRUE

Question 7

Adverse Audit Report is issued when the auditor cannot form an opinion due to insufficient information or lack of cooperation from management.

Answer 7

False (Disclaimer)

Question 8

A key purpose of MD&A is to forecast future growth & investments by outlining future plans, market expansion, and investment strategies.

Answer 8

True

Question 9

The audit report provides an opinion on whether the financial statements fairly present the financial position of the company in accordance with applicable accounting standards such as GAAP and IFRS.

Answer 9

True

Question 10

An example of Financial Performance is: “Our operating cash flow improved to P800 million, allowing us to invest P300 million in research and development. We also reduced long-term debt by P100 million, strengthening our financial position”

Answer 10

True

Question 11

An importance of an Audit Report called Investor Confidence means that lenders and banks review audit reports before approving loans.

Answer 11

False (creditworthiness)

Question 12

A key component of MD&A called Financial Performance Analysis explains cash flow management, debt levels, capital expenditures, and future funding needs.

Answer 12

FALSE (Liquidity and Capital Resources)

Question 13

A key purpose of MD&A is to discuss business performance & strategy by detailing company operations, and competitive positioning

Answer 13

True

Question 14

Qualified Audit Report is the best type of audit report a company can receive.

Answer 14

False (Unqualified)

Question 15

An audit report is a vital document that evaluates a company’s financial statements for accuracy and compliance with accounting standards.

Answer 15

TRUE

Question 16

A key component of MD&A called Liquidity & Capital Resources helps investors assess the company’s ability to meet financial obligations.

Answer 16

True

Question 17

Clean audit report builds trust, while a negative report signals financial risks or fraud.

Answer 17

True

Question 18

An importance of MD&A is that it aids investment decisions which means it prepares stakeholders for potential business disruptions.

Answer 18

False (identifies risks and challenges)

Question 19

Disclaimer of opinion is issued when the financial statements are mostly correct but have a specific issue that does not misrepresent the overall financial health.”

Answer 19

False (Qualified Audit Report)

Question 20

By reading MD&A, investors, analysts, and regulators gain a deeper understanding of how a company operates, its challenges, and its growth potential

Answer 20

True