The Objective of General-Purpose Financial Reporting Is to Provide Financial

question 133

Multiple Choice

The objective of general-purpose financial reporting is to provide financial information about a reporting entity to each of the following except

• A) potential equity investors.
• B) potential lenders.
• C) present investors.
• D) All of these answers are correct.

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Definitions:

Bargain Purchase Option

An option in a lease agreement that allows the lessee to purchase the leased asset at the end of the lease term at a price significantly lower than the expected fair market value.

Lease Term

The fixed, non-cancellable period of time for which a lease is agreed upon between the lessee and the lessor.

GAAP

Generally Accepted Accounting Principles, the standard framework of guidelines for financial accounting.

Capital Lease

A long-term lease agreement that designates the lessee (the person who rents the asset) as having the financial responsibilities and benefits of ownership.