Chapter 1, Problem 1QC

Financial statements can be used by which of the following groups?

1. a. Individuals
2. b. Investors and creditors
3. c. Regulatory bodies
4. d. All of the above

To determine

Identify the use of the financial statement from the given choices.

Answer to Problem 1QC

“Option D. All of the above” is the correct answer.

Explanation of Solution

Financial statements are condensed summary of transactions communicated in the form of reports for the purpose of decision making. The four types of financial statements are as follows:

• Income statement
• Statement of retained earnings
• Balance sheet:
• Statement of cash flows:

Uses of financial Statements

• Individuals can be public, student or investors they make use financial statement to decide their monthly income and expenditures and to have control over their bank accounts and to collect the data of the company.
• The investors will use financial statements to analyse the financial performance of the company so that they can invest in that company and creditors will make use of financial statement to look into the liability of the company and their ability to repay in future so that they can decide whether to lend loan to the company.
• Regulatory bodies like tax authorities use financial statement to analyse the financial performance of the company to impose taxes accordingly.

Therefore, from the above explanation Option D is the correct answer and other option a, option b, and option c are incorrect answers.

Conclusion

Therefore, Option D is the correct answer.