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Financial Statements and Stewardship Role Quiz

16 Questions

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Financial Statements and Stewardship Role Quiz

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Questions and Answers

What do the shareholders of the company want to assess?

The company's ability to pay suppliers

The company's ability to pay taxes

The company's ability to manage the business efficiently (correct)

The company's ability to advise potential suppliers

Why do suppliers want to know about the company's financial situation?

To ensure that the company is a secure source of supply (correct)

To provide a basis for national statistics

To assess the tax payable by the company

To advise potential suppliers of goods to the company

What information do providers of finance, such as banks, want to ensure?

The company's ability to repay debts (correct)

The company's ability to advise investors

The company's ability to pay taxes

The company's ability to manage the business efficiently

Why do the taxation authorities want to know about business profits?

To assess the tax payable by the company Signup and view all the answers

Why should employees of the company have a right to information about the company's financial situation?

Because their future careers and wages depend on it Signup and view all the answers

Who needs information for their clients or audience?

Financial analysts and advisers Signup and view all the answers

What do journalists need information for?

For their reading public Signup and view all the answers

Who is interested in the allocation of resources and therefore in the activities of business entities?

Government and their agencies Signup and view all the answers

What are trade contacts interested in knowing?

That the company is a secure source of supply Signup and view all the answers

Why are credit agencies interested in getting information?

To advise potential creditors about the company Signup and view all the answers

What is the primary objective of financial statements?

To provide information about the financial position, performance, and changes in financial position of an entity Signup and view all the answers

In what situations is the stewardship role particularly important for financial statements?

When there is a separation between ownership and management in an entity Signup and view all the answers

Who are the managers of a company appointed by, and what information do they need from financial statements?

Managers are appointed by the company's owners and they need information about the company's financial situation Signup and view all the answers

For what types of economic decisions are financial statements likely to be used?

Decisions to buy, hold, or sell equity investments Signup and view all the answers

Which users are likely to be interested in financial information about a large company with shares listed on a stock exchange?

Managers of the company and potential investors Signup and view all the answers

What is the significance of providing financial information to a wide range of users?

It ensures accountability and assists in economic decision making Signup and view all the answers