ACC 100 Lecture 6: Midterm Review Practice Questions - Solutions
Document Summary
As you can see from the example of tees inc. in chapter 2, both the preparers of financial information and the external stakeholders, the users, have objectives (things they want from the business). The owners of tees inc. want a loan and they need to provide financial information to get it. The bank, an external stakeholder, wants financial information so it can decide on the amount of the loan as well as whether the loan, plus interest, will be repaid by the business. Both parties need financial information to meet their objectives. The qualitative characteristics and underlying assumptions are part of generally accepted accounting principles, called gaap (pronounced as gap). Preparers of accounting information use gaap as a guideline when preparing financial accounting information. The overall objective of gaap is to provide financial information about a business that is useful to external stakeholders for decision- making.
