Accounting Information Serves a Valuation Function When It Is Used

question 79

Multiple Choice

Accounting information serves a valuation function when it is used by:

• A) managers to evaluate net income and taxes.
• B) directors to evaluate net income and taxes.
• C) government officials to evaluate net income and taxes.
• D) investors to estimate the value of the business

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Definitions:

Expenditure

Actual payment of cash or cash equivalent for goods or services, or a charge against available funds in settlement of an obligation as evidenced by an invoice, receipt, voucher, or other such document; acquired material, property, or labor in exchange for money.

Acquired Material

Items or substances that are obtained or collected for use, often referring to resources gathered for a specific project or purpose.

Liabilities

Anything to which a person is liable, responsible, legally bound; debts or accounts payable (A/P) owed by the business.

Accounts Payable

The amount of money owed by a company to its creditors or suppliers for goods and services received but not yet paid for.