Accounting information is used by investors and creditors of a company to predict
Potential merger candidates for the company
Appropriate remunerations for the company’s staff
Future cash flows of the company
Future tax payments of the company
Correct answer is C
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.