Explain the term stakeholder and distinguish between stakeholders with a direct interest versus an indirect interest in the Companies that issue financial reports.
Explanation of Solution
Stakeholders:
Stakeholders (A person, group or an organisation) are the parties (outsiders) who can affect or can be affected by the happening of an entity. For example, creditors, financial analysts.
Explanation for the term stakeholder is as follows:
Stakeholders are termed as the parties that use the accounting information.
Distinguish between stakeholders with a direct versus an indirect interest in the Companies that issue financial reports are as follows:
- Stakeholders with a direct interest are affected by the happening of the business. These stakeholders include managers, owners, creditors, employees and supplier.
- Stakeholders with an indirect interest are individuals that use the financial reports for the purpose of advising and influencing their clients. These stakeholders include brokers, government regulators, financial analysts and news reporters.
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Chapter 1 Solutions
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