Bowen Pty Plc Is a Small Proprietary Company with Seven

question 62

Multiple Choice

Bowen Pty Plc is a small proprietary company with seven directors.Four of the seven directors own 75% of the ordinary shares and the remaining shares are owned by family members of the directors.The company also has 15 trade creditors and an open line of credit with one state bank.Is Bowen Pty Plc a reporting entity and hence required to prepare general purpose financial reports?

• A)Yes, because dependent users of financial reports exist.
• B)Yes, because there are trade creditors who are external users.
• C)No, because it is a small proprietary firm.
• D)No, because there are no obvious users who are unable to command the preparation of information from the entity.

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Definitions:

Promotional Campaign

A series of marketing efforts designed to increase awareness or sales of a product or service.

Z Statistic

A type of standard score that indicates how many standard deviations an element is from the mean of its population.

Normal Distribution

A bell-shaped frequency distribution curve that is symmetric about the mean, showing that data near the mean are more frequent in occurrence.

One-tailed Test

A statistical hypothesis test in which the alternative hypothesis specifies a direction of the effect.