Users of Accounting Information Who Bear Little of the Cost

question 32

Multiple Choice

Users of accounting information who bear little of the cost of producing the information and therefore have an incentive to demand increased levels of disclosure are know as:

• A)Agents
• B)Principals
• C)Free-agents
• D)Free-riders

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Definitions:

Fair Value

The estimated market price of an asset or liability, reflecting the amount for which it could be exchanged or settled between knowledgeable, willing parties in an arm's length transaction.

Trading Securities

Financial securities purchased by a company, not intended for long-term investment but rather for making a profit in the near term from their sale or trade.

Unrealized Holding Loss

A decrease in the value of an investment that has not yet been sold for cash.

Income Statement

A financial report that shows a company's revenues, expenses, and net income over a specific period.