Answer some question - Research Paper Example

Financial Accounting Questions Question Shareholders usually invest their resources in corporations with hope that the investments will continue increases in value from the trading activities (Sherman 47). Therefore, the primary goal of a corporation is to make the best out the shareholders investments. In most cases, shareholders appoint board of directors to run the corporation on their behalf. The board of directors hires managers and bestows them with responsibilities to pursue corporation’s policies leading to maximization of the investors’ wealth (Sherman 53).

Question 2 Management prepares corporations annual reports for investors and regulatory bodies. The annual reports provide a detailed account of the operations of the corporations and disclosure of corporation’s financial position (Sherman 64). Basically, the annual reports contain income statement, balance sheet, cash flow statements and statements of shareholders equity.Question 3 Financial ratio analysis guides the equity investors in assessing the performance of their investments. It helps them to compare the performance of their companies over time and across the industry.

In regard to the short term creditors, financial ratio analysis enables the creditors assess the potential of the company to meet its short term credits obligations (Sherman 82). On the other hand, financial ratio analysis will enable long term creditors to assess the company’s ability to repay the borrowed loans and loan interest within the stipulated time.Question 4 When making an investment by depositing money in the bank that pays compound interests, it is better to choose an option that results to frequent compounding.

Therefore, the best option in this case is the one that pays compound interests on a daily basis (Sherman 109). This is because compounding the interests daily results to additional capital from the interest earned for the next day.Works CitedSherman, Eliot. Finance and Accounting for Nonfinancial Managers. New York: American Management Association, 2011. 46-123.