7. Investors and creditors are interested in the probability that their original

Question

7. Investors and creditors are interested in the probability that their original investment or loan will eventually be returned, and that they will receive a reasonable return while their funds are invested or borrowed. These expectations are collectively referred to as:
A. Expected profitability.
B. The objectives of financial reporting.
C. Cash flow prospects.
D. Financial position.

8. Financial statements are designed primarily to:
A. Provide managers with detailed information tailored to the managers' specific information needs.
B. Provide people outside the business organization with information about the company's financial position and operating results.
C. Report to the Internal Revenue Service the company's taxable income.
D. Indicate to investors in a particular company the current market values of their investments.

Explanation / Answer

8. Financial statements are designed primarily to: Provide people outside the business organization with information about the company's financial position and operating results.

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