Describe the users of audited financial statements and the decisions that they need to make based on reliable information. Please use the illustration below to help you answer this question.
Describe the users of audited financial statements and the decisions that they need to make based on reliable information. Please use the illustration below to help you answer this question.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Describe the users of audited financial statements and the decisions that they need to make based on reliable information. Please use the illustration below to help you answer this question.
![Exhibit 1.1
Users of Audited Financial Statements
User
Types of Decisions
Management
Review performance, make operational decisions, and report results to capital
markets
Buy or sell stock
Buy or sell bonds
Evaluate loan decisions, considering interest rates, terms, and risk
Stockholders
Bondholders
Financial institutions
Taxing authorities
Regulatory agencies
Determine taxable income and tax due
Develop regulations and monitor compliance
Make collective bargaining decisions
Assess the financial position of a company in litigation
Labor unions
Court system
Vendors
Assess credit risk
Retired employees
Protect employees from surprises concerning pensions and other
post-retirement benefits](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F605edda1-53e7-4a52-a127-1a518c69f281%2Fa8769342-60e3-4e2c-95fa-fd2871f660ea%2Ff6wc438_processed.png&w=3840&q=75)
Transcribed Image Text:Exhibit 1.1
Users of Audited Financial Statements
User
Types of Decisions
Management
Review performance, make operational decisions, and report results to capital
markets
Buy or sell stock
Buy or sell bonds
Evaluate loan decisions, considering interest rates, terms, and risk
Stockholders
Bondholders
Financial institutions
Taxing authorities
Regulatory agencies
Determine taxable income and tax due
Develop regulations and monitor compliance
Make collective bargaining decisions
Assess the financial position of a company in litigation
Labor unions
Court system
Vendors
Assess credit risk
Retired employees
Protect employees from surprises concerning pensions and other
post-retirement benefits
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