Financial Statements Objectives and Stewardship Role

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What is the primary objective of financial statements?

To provide information about the financial position and performance of an entity (correct)

To provide information about the social responsibility initiatives of the entity

To provide information about the environmental impact of the entity's operations

To provide information about the political decisions made by the entity

What role do financial statements play in relation to managers of a company?

To assess the environmental impact of the company's operations

To provide information about the personal finances of the managers

To monitor the social activities of the managers

To give an account of how managers have used the resources provided by the company's owners (correct)

What type of decisions are financial statements likely to be used for?

Decisions to buy, hold or sell equity investments (correct)

Decisions on environmental sustainability initiatives

Decisions on social media marketing strategies

Decisions on employee healthcare benefits

Who needs information about a large company's financial situation as it is currently and as it is expected to be in the future?

Managers appointed by the company's owners Signup and view all the answers

What is particularly important when there is a separation between ownership and management in an entity?

The stewardship role played by financial statements Signup and view all the answers

What do financial statements provide information about in relation to amounts lent to the entity?

Assessment of the security of amounts lent to the entity Signup and view all the answers

What do shareholders of the company want to assess?

How profitable the company's operations are Signup and view all the answers

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

To know about the company's ability to pay its debts Signup and view all the answers

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

That the company is able to keep up interest payments Signup and view all the answers

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

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

What do financial analysts and advisers need information for?

To advise investors and provide information for their clients or audience Signup and view all the answers

What are trade contacts interested in knowing about the company?

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

What information do credit agencies want?

Information to advise potential suppliers of goods to the company Signup and view all the answers

What are taxation authorities interested in knowing?

The business profits in order to assess the tax payable by the company, including sales taxes Signup and view all the answers

Why are governments interested in business entities' activities?

The allocation of resources by government agencies Signup and view all the answers

What do customers need to know about the company?

Whether the company is a secure source of supply and is in no danger of having to close down Signup and view all the answers

Financial Statements Objectives and Stewardship Role

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