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Question
Statement I: Owners need accounting information to know the profitability and financial soundness of their investment.
Statement II: Creditors require accounting information to assess the credit worthiness and repaying capacity of the firm.
Options
Only I is correct.
Only II is correct.
Both I and II are correct.
Both I and II are wrong.
MCQ
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Solution
Both I and II are correct.
Explanation:
Owners use accounting information to judge profitability and financial soundness, while creditors use it to assess creditworthiness and repayment capacity. Hence, both statements are correct.
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