Summary Business Accounting

Question:

The Management’s Discussion and Analysis (MD&A) section of an annual report

a. Includes the company president’s letter.

b. Covers three financial aspects of a firm’s business: liquidity, capital resources, and results of

operations.

c. Is a technical analysis of past results and a defense of those results by management.

d. Covers marketing and product line issues.



Answer:



b. The MD&A section is included in SEC filings. It addresses in a nonquantified manner the

prospects of a company. The SEC examines it with care to determine that management has

disclosed material information affecting the company’s future results. Disclosures about

commitments and events that may affect operations or liquidity are mandatory. Thus, the

MD&A section pertains to liquidity, capital resources, and results of operations.