Knowledge of the Objectives or Mission of a Business Will

question 19

Multiple Choice

Knowledge of the objectives or mission of a business will be most useful in assisting users of financial reports in understanding:

• A)the liquidity position of the business.
• B)why it is taking longer than it should to collect money from accounts receivable.
• C)the financial reporting cycle.
• D)what the business is trying to achieve.

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Definitions:

Par Common Stock

The face value of common shares issued by a company, which is noted on the share certificate.

No-Par Common Stock

Shares of common stock issued without a par value, which means they are not assigned a nominal face value.

Treasury Stock

Shares of a company's own stock that it has reacquired and held in the company's treasury.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock and typically does not have voting rights but has a fixed dividend.