Financial Accounting, 8th Edition
8th Edition
ISBN: 9780078025556
Author: Robert Libby, Patricia Libby, Daniel Short
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 1Q
To determine
Explain the primary objective of financial reporting for external users.
Expert Solution & Answer
Explanation of Solution
Financial reporting:
Financial reporting is the procedure to communicate the financial information which is obtained from the financial statement of business. It is necessary to disclose the data to various stakeholders for decision making purpose.
The primary objectives of financial reporting for external users are as follows:
- Financial reports provide the useful economic information about the business to stakeholders.
- Financial reports help the investor to understand the accounting concept and procedure of the business.
- Financial reports help the investor to make sound financial decision.
- Financial reports help to investor access the uncertainty in
cash inflow and outflow of the business.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
What is th total equity for optima supplies?
If Ram Nation can give up one unit of future consumption and as a result increase its current consumption by 0.96 units, what must be its real rate of interest. I want answer
Total equity is 920
Chapter 2 Solutions
Financial Accounting, 8th Edition
Ch. 2 - Prob. 1QCh. 2 - Define the following: a. Asset b. Current asset c....Ch. 2 - Prob. 3QCh. 2 - Why are accounting assumptions necessary?Ch. 2 - For accounting purposes, what is an account?...Ch. 2 - What is the fundamental accounting model?Ch. 2 - Prob. 7QCh. 2 - Explain what debit and credit mean.Ch. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Prob. 12QCh. 2 - How is the current ratio computed and interpreted?Ch. 2 - Prob. 14QCh. 2 - Prob. 1MCQCh. 2 - Which of the following is not an asset? a....Ch. 2 - Total liabilities on a balance sheet at the end of...Ch. 2 - The dual effects concept can best be described as...Ch. 2 - The T-account is a tool commonly used for...Ch. 2 - Prob. 6MCQCh. 2 - The Cash T-account has a beginning balance of...Ch. 2 - Prob. 8MCQCh. 2 - At the end of a recent year, The Gap, Inc.,...Ch. 2 - Prob. 10MCQCh. 2 - Prob. 1MECh. 2 - Matching Definitions with Terms Match each...Ch. 2 - Identifying Events as Accounting Transactions...Ch. 2 - Classifying Accounts on a Balance Sheet The...Ch. 2 - Prob. 5MECh. 2 - Prob. 6MECh. 2 - Prob. 7MECh. 2 - Prob. 8MECh. 2 - Prob. 9MECh. 2 - Prob. 10MECh. 2 - Prob. 11MECh. 2 - Prob. 12MECh. 2 - Prob. 13MECh. 2 - Prob. 1ECh. 2 - Prob. 2ECh. 2 - Prob. 3ECh. 2 - Prob. 4ECh. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Prob. 6ECh. 2 - Prob. 7ECh. 2 - Analyzing the Effects of Transactions In...Ch. 2 - Prob. 9ECh. 2 - Prob. 10ECh. 2 - Prob. 11ECh. 2 - Prob. 12ECh. 2 - Prob. 13ECh. 2 - Prob. 14ECh. 2 - Prob. 15ECh. 2 - Prob. 16ECh. 2 - Inferring Typical Investing and Financing...Ch. 2 - Prob. 18ECh. 2 - Prob. 19ECh. 2 - Prob. 20ECh. 2 - Identifying Accounts on a Classified Balance Sheet...Ch. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - Prob. 6PCh. 2 - Prob. 1APCh. 2 - Prob. 2APCh. 2 - Prob. 3APCh. 2 - Prob. 4APCh. 2 - Prob. 1CPCh. 2 - Prob. 2CPCh. 2 - Prob. 3CPCh. 2 - Prob. 4CPCh. 2 - Prob. 5CPCh. 2 - Prob. 6CPCh. 2 - Prob. 7CPCh. 2 - Prob. 8CPCh. 2 - Prob. 1CC
Knowledge Booster
Similar questions
- Over the past four years, the Dow Jones Industrial Average (DJIA) delivered annual returns of 12%, -3%, 18%, and 9%. What is the arithmetic average annual return per year? a) 10.25% b) 8.50% c) 9.00% d) 9.75%arrow_forwardMAX's Auto Repair, a proprietorship, started the year with total assets of $72,000 and total liabilities of $48,500. During the year, the business recorded $120,600 in repair revenues, $65,400 in expenses, and MAX Grant, the owner, withdrew $12,500. MAX’s capital balance at the end of the year?arrow_forwardPeterson Company estimates that overhead costs for the next year will be $3,600,000 for indirect labor and $910,000 for factory utilities. The company uses machine hours as its overhead allocation base. If 110,000 machine hours are planned for this next year, what is the company's plantwide overhead rate? a) $41.00 per machine hour b) $32.30 per machine hour c) $0.03 per machine hour d) $8.27 per machine hour e) $0.12 per machine hourarrow_forward
- need true answer of this General accounting questionarrow_forwardCreston Alloy Works manufactures a single product that sells for $90 per unit. Variable costs are $58 per unit, and fixed costs total $135,000 per month. Calculate the operating income if the selling price is raised to $94 per unit, advertising expenditures are increased by $18,000 per month, and monthly unit sales volume becomes 5,500 units.arrow_forwardIf Ram Nation can give up one unit of future consumption and as a result increase its current consumption by 0.96 units, what must be its real rate of interest. Nonearrow_forward
- Calculate the Debt to Equity Ratio given that Total Equity is $920 and Total Debt is $780. a. 0.52 b. 0.85 c. 1.10 d. 1.33arrow_forwardIf Ram Nation can give up one unit of future consumption and as a result increase its current consumption by 0.96 units, what must be its real rate of interest. Answer this questionarrow_forwardSolve this Financial Accounting questionsarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning