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Please answer Questions 1, 2, 3, 6 and 7 from your textbook on page 1-18 Answer Example: 8. Who is the primary user group for
Please answer Questions 1, 2, 3, 6 and 7 from your textbook on page 1-18 Answer Example: 8. Who is the primary user group for general-purpose financial statements? 8. Shareholders, creditors, suppliers, employees, and regulators all use general- purpose financial statements. The primary user group is capital providers (shareholders and creditors). Textbook Questions 1. World markets are becoming increasingly intertwined. The tremendous variety and volume of both exported and imported goods indicates the extensive involvement in international trade. As a result, the move towards adoption of international financial reporting standards has and will continue in the future. 2. Financial accounting measures, classifies, and summarizes in report form those activities and that information which relate to the enterprise as a whole for use by parties both internal and external to a business enterprise. Managerial accounting also measures, classifies, and summarizes in report form enterprise activities, but the communication is for the use of internal, managerial parties, and relates more to subsystems of the entity. Managerial accounting is management decision- oriented and directed more toward product line, division, and profit centre reporting. 3. Financial statements generally refer to the four basic financial statements: statement of financial position, statement of comprehensive income (or income statement), statement of cash flows, and statement of changes in equity. Financial reporting is a broader concept; it includes the basic financial statements and any other means of communicating financial and economic data to interested external parties. 6. The objective of general-purpose financial reporting is to provide financial information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors in making decisions about providing resources to the entity. 7. General-purpose financial statements provide financial reporting information to a wide variety of users. To be cost effective in providing this information, general- purpose financial statements provide at the least cost the most useful information possible
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