Question

Answer the following questions:

1.         Briefly state what makes Accounting information useful to its users.(5)

2.         List at least five types of users of financial statements and briefly explain each     user’s information expectation from the financial statements. (10)

Answer 1

1)

accounting information provides companies with various pieces of information regarding business operation. this helps the organization to review the performance o the organization and compare worthy precious year or the business is able to compare the results with other competitors.

which gives businesses various insights about the performance of the business.

accounting information allows a business to make a proper decision.and helps the business to focus on different weak aspects. accounting information also provides business owners with information about the cost of various resources or business operations.

the investors can use the accounting information to form an opinion about the business, and helps them to invest in the business intelligently.therre are many users for accounting information. the main users of the accounting information is its stakeholders.

different users have a different objectives for using this accountting information.auditions use this information to identify whether this information is presented in a true and fair manner.

2)

a financial statements prepared by the companies is used by several users. the main users are company stakeholders.

management of the business

the management of the organization is the first user of the financial statement. and these are the people responsible for preparing their financial statement. the company of the company uses this to review the performance of the organization.

investors

Investors are owners of the company. they look at the financial statement to access the performance of the organization and to make proper decision.

government

tax-depermtnt of the country are interested in the financial statement.they look at the financial statement top keep and check if the company is paid appropriate taxes.

auditors

auditors of the organisation is interested in the financial statement ,to ensure that the statement is presented in a true and fair manner.

lenders

lendors like banks and other lending institution is interested in the financial ststement.they check the liquidity and profitability of the organisation.they also check the ability of the organisation to repay the loan