Which of the following purposes would financial statements serve for external users?
A) To determine purchasing needs.
B) To fulfill regulatory requirements for companies whose stock is sold to the public.
C) To assess employee performance and compensation.
D) To find information about projected costs and revenues of proposed products.
E) To assist in monitoring consumer needs and price concerns.

Question

Quizplus · Accepted Answer

Financial statements are required to be disclosed to external users such as investors, creditors, analysts, and regulatory bodies. Companies whose stock is sold to the public are required to comply with the regulatory requirements prescribed by the Securities and Exchange Commission (SEC). The financial statements provide the external users with information to make informed decisions about investing or lending money to the company. Other purposes mentioned in the options, such as determining purchasing needs, assessing employee performance, finding information about projected costs and revenues, and monitoring consumer needs and price concerns are relevant to internal decision-making processes of the company.

Which of the Following Purposes Would Financial Statements Serve for External