Accounting Multiple Choice Question – 26 January 2025

Alex, a consultant, has made two statements about the primary focus of the users of financial statements of Lucy plc.

Statement 1 The primary focus of suppliers is on Lucy’s risk and return.

Statement 2 The primary focus of shareholders is on Lucy’s solvency.

Are these statements true or false?

Select ONE answer:

1. Statement 1 True and Statement 2 False
2. Statement 1 False and Statement 2 True
3. Statement 1 True and Statement 2 True
4. Statement 1 False and Statement 2 False

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct == > Liquidity, not risk and return, is the main concern for the entity’s suppliers. Risk and return, not solvency, are the main concern of the entity’s shareholders.

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