Which of the Following Purposes Would Financial Statements Serve for External

question 201

Multiple Choice

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.

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Definitions:

Lessors

Parties that lease or rent out assets to lessees in exchange for periodic payments.

Leased Assets

Assets that are used by an entity under the terms of a lease agreement, which entails periodic payments for a specified time.

Operating Leases

Lease agreements for a shorter period than the asset's useful life, where the lessee does not assume the risks and rewards of ownership.

Capital Leases

Leases that are recognized as asset purchases for accounting purposes, where the lessee gains ownership rights of the leased asset at the end of the lease term.