A. potential merger candidates for the company
B. appropriate remunerations for the company’s staff
C. future cash flows of the company
D. future tax payments of the company
Correct Answer:
Option C – future cash flows of the company
Explanation
The average lender or investor does not have ongoing inside access to the day-to-day operations of a company. Instead, it relies on financial accounting to provide accurate and readily comparable information. Financial accounting allows outside actors to observe the profitability and value of a business.
Creditors are interested in accounting information, because it enables them to determine the credit worthiness of the business.
