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IAI Actuarial Core Principles · Business Finance · Interpreting company accounting information

Which of the following is an accurate description of the stewardship role of company accounts?

Under the stewardship role, accounts let management demonstrate to shareholders how it has used the resources entrusted to it. They do not guarantee dividends, replace audit, exist solely for tax authorities, or show liquidation value.

  1. AThey allow management to demonstrate how it has used the resources entrusted to it by shareholdersCorrect
  2. BThey guarantee that the company will pay a dividend
  3. CThey replace the need for an external audit
  4. DThey are prepared solely for the tax authorities
  5. They show the amount shareholders could realise if the company were wound up

Explanation

Stewardship means management accounts to owners for the resources entrusted to it. Accounts do not guarantee dividends, replace audit, serve only tax authorities, or show liquidation value.

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