Accounting information serves a valuation function when it is used by:
A)managers to run the business.
B)directors to protect stockholders' interests.
C)government officials to protect the public's interests.
D)investors to estimate how much the business is worth.

Question

Quizplus · Accepted Answer

Investors use accounting information to estimate the value of a business, which serves a valuation function. While accounting information is also used by managers to run the business and by directors to protect stockholders' interests, these do not necessarily involve a valuation function. Similarly, while accounting information may be used by government officials to protect the public's interests, this is not a valuation function.

Accounting Information Serves a Valuation Function When It Is Used