Chapter 1 Flashcards
1
Q
Explain how accounting makes it possible to use scarce resources more efficiently?
A
Accounting provides reliable, relevant, and timely information to managers, investors, and creditors so that resources are allocated to the most efficient enterprises. Accounting also provides measurements of efficiency (profitability) and financial soundness.
2
Q
Explain the meaning of “stakeholder” and identify key stakeholders in financial reporting, explaining what is at stake for each one.
A
Investors, creditors, management, securities commissions, stock exchanges, analysts, credit rating agencies, auditors, and standard setters are some of the major stakeholders.
