Question

Name three users of the financial statements and how misstatement of the statements may injure them?

Answer 1

There are many users of financial statements produced by an organisation

folloeing are the list of users of financial statements

company management,needs to unserstand profitability,liquidity and cashflow of the organisation every month,so that they can make operational,investting and financing decisions about the company

Competitors. Entities competing against a business will attempt to gain access to its financial statements, in order to evaluate its financial condition. The knowledge they gain could alter their competitive strategies.there should be healthy competition between the companies

When a customer is considering which supplier to select for a major contract, it wants to review their financial statements first, in order to judge the financial ability of a supplier to remain in business long enough to provide the goods or services mandated in the contract.customer will come to our company when he will satisfy with our service.

Suppliers will require financial statements in order to decide whether it is safe to extend credit to a company.

Unions. A union needs the financial statements in order to evaluate the ability of a business to pay compensation and benefits to the union members that it represents.

A company may elect to provide its financial statements to employees, along with a detailed explanation of what the documents contain. This can be used to increase the level of employee involvement in and understanding of the business.they should feel that the company is runnig well and it is in best position

A government in whose jurisdiction a company is located will request financial statements in order to determine whether the business paid the appropriate amount of taxes.To know wheher they are paying taxes on time and genuinly

Investors will likely require financial statements to be provided, since they are the owners of the business, and want to understand the performance of their investment.They are the most users of financial statements.they use them to make financial decisions

An entity loaning money to an organization will require financial statements in order to estimate the ability of the borrower to pay back all loaned funds and related interest charges.lenders are second most important after investors