What is interest? Explain.

A.

Interest is the future value at some specified point in the future of a cash flow or a series of cash flows to be paid or received between the current date and the specified point in the future.

B.

Interest is the present value of a cash flow or a series of cash flows to be received or paid in the future.

C.

Interest is the process of moving from the future value to the present value of a sum of money.

D.

Interest is the price paid for the use of money. The amount earned on the initial investment is referred to as interest.

What is the purpose of generating financial statements and who are the primary users of this information?

A.

The purpose of generating financial statements is to comply with the regulatory requirements of the Financial Accounting Standards Board (FASB). FASB identifies investors, lenders and management as the primary users of the financial statements.

B.

The purpose of generating financial statements is to provide useful information to users to evaluate economic entities and make efficient resource allocation decisions based on the risks and returns of a particular investment. The Financial Accounting Standards Board (FASB) identifies investors, lenders and management as the primary users of the financial statements.

C.

The purpose of generating financial statements is to provide useful information to users to evaluate economic entities and make efficient resource allocation decisions based on the risks and returns of a particular investment. The Financial Accounting Standards Board (FASB) identifies investors, lenders and other creditors as the primary users of the financial statements.

D.

The purpose of generating financial statements is to comply with the regulatory requirements of the Financial Accounting Standards Board (FASB). FASB identifies investors, lenders and other creditors as the primary users of the financial statements.