Explain why each of the following persons or groups would be interested in seeing the financial statements of a company. Also state whether each has a direct or indirect financial interest. a. Potential investor b. Internal Revenue Service c. A labor union d. Securities and Exchange Commission e. Potential creditor f. Management g. Economic planners
a. To help determine if the prospects for a profitable investment is good relative to other investment opportunities (direct interest)
b. To help determine the tax that should be levied against the company (indirect interest)
c. To give the labor union negotiators a basis for negotiating for higher wages and benefits (indirect interest)
d. To help determine if the investing public is being given accurate and complete information (indirect interest)
e. To help determine if the creditor should extend credit to the company (direct interest)
f. To help the company achieve goals such as profitability and liquidity (neither direct nor indirect)
g. To set economic policies and judge economic programs (indirect interest)
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What will be an ideal response?
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Indicate whether the statement is true or false