Accounting information serves a valuation function when it is used by:
A)managers to evaluate net income and taxes.
B)directors to evaluate net income and taxes.
C)government officials to evaluate net income and taxes.
D)Investors in making their decision to buy,hold or sell the company's stock.

Question

Quizplus · Accepted Answer

Accounting information is important for investors in making decisions about buying, holding or selling a company's stock. They use financial statements to evaluate the company's financial position, performance and future prospects. Valuation of a company's stock is based on the information provided by accounting statements, such as the income statement, balance sheet and statement of cash flows. Therefore, option D is the best choice. Option A, B, and C are incorrect because although managers, directors and government officials may use accounting information to evaluate net income and taxes, the question specifically asks about the valuation function, which is only applicable to investors.

Accounting Information Serves a Valuation Function When It Is Used