Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Shares

Question:

Who is the target audience of a prospectus?

Options:

Existing shareholders only

Competitors of the company

Government regulatory authorities

General public and prospective investors

Correct Answer:

General public and prospective investors

Explanation:

A prospectus is primarily intended to reach out to the general public and potential investors. It serves as an invitation to these individuals to consider investing in the newly established company. The prospectus provides comprehensive information about the company's operations, financial status, goals, and plans, which helps potential investors make informed decisions about whether to invest in the company's shares or securities.