Question

1. Discusion

Describe the function of financial statements to different users. Provide examples of different uses of financial statements to both external and internal users.

Answer 1

Financial statements can be of different uses for both external as well as internal users. That could be as follows-

1. Managers-manager requires financial statement to be used for different managerial purposes and arriving at various type of strategies according to the performance reflected in financial statements.

2.shareholders-shareholders uses the financial statement to get a good idea about the performance of the company and need to make sure that their investments are performing on the right track.

3. Prospective investors-financial statement could be a very good bases for attracting various kind of prospective investors.

4. Suppliers also need to have a fair idea of financial instrument in order to get a chance for securing their investments.

5.Customers also can use the financial statement of the respective organisation in order to get a fair idea about whether the company is financially stable or not.

6.Government need to have a fair Idea about financial instrument in order to know about the tax payment ability of the organisation.

It is used as basic statement through which an idea about the performance of the company is derived at, by following stakeholders of the company. Then they use the financial statements to get an idea about respective ability of the company to benefit stakeholders.