Accounting Information Serves a Governance Function When It Is Used

question 41

Multiple Choice

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

• A)managers to make a business decision.
• B)government officials to regulate the business and its financial records.
• C)directors to oversee the business.
• D)investors to vote on company policies.

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Definitions:

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue, indicating the company's actual financial performance over a specific period.

Rapidly Rising Costs

A situation where the expenses associated with producing goods or services increase at a faster pace than usual, affecting profitability.

LIFO Method

LIFO method, or Last-In, First-Out, is an inventory valuation method where the most recently produced or acquired items are the first to be sold, affecting cost of goods sold and inventory valuation.

Inventory Profits

The increase in net income that occurs when a company sells its inventory for more than it cost to produce or purchase.