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Description
Flashcards by David McGuinness, updated more than 1 year ago
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Created by David McGuinness
over 8 years ago
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| Question | Answer |
| Who are the main users of Financial Statements | THE MAIN USERS 1. Investors & potential investors 2. Lenders 3. Other Creditors OTHER USERS 4. Employees & Trade Union Representatives 5. Government 6. Suppliers 7. Customers 8. The Public 9. Management & Competitors |
| 1. Investors & Potential Investors | Investors are interested in the potential profit and the security of their investment. |
| 2. Lenders | They need to know if they will be repaid. This will depend on the solvency of the company. |
| 3. Other creditors | Suppliers and trade creditors require information that helps them understand and assess the short-term liquidity of a business. |
| 4. Employees & Trade union Representatives | They need to know if the employer can offer secure employment & management. |
| 5. Government | Agencies need to know how the economy is performing in order to plan financial and industrial policies. |
| 6. Suppliers | They would like to know if they will be paid. Also potential new suppliers may like reassurance of the financial health of the business before supplying goods. |
| 7. Customers | They would like to know if the company can supply them in future. Especially if the customer is dependent on a company for specialised supplies. |
| 8. The Public | They may wish to assess the effect of the company on the economy, local environment and local community |
| 9. Management & Competitors | They would use the Financials statement of the business to make economic decisions. (however, they would mainly use monthly management accounts as their main source of financial information) |
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