Question

In: Accounting

What are the two types of users of financial statements. How do they use the financial...

What are the two types of users of financial statements. How do they use the financial statements?

Solutions

Expert Solution

There are many users of Financial Statements, two of them are :-

  1. Investors.
  2. Competitors.

Investors Uses Financial statements to analyze whether to invest in a company or not. The return on Investment ratio, Earning Per Share, Dividend decisions are some of the peculiar things which are studied by an investor to make share he is investing in a cash generating company. Investors may sometimes withdraw their investments from the company when they get to know the bad performance of company. Generally Investors wish to keep their money invested till they get a return more than normal rate of return. Investors are also sometimes the owners of the company. They uses Financial statements to formulate Strategies and future plans such as what business to shut down or what to expand.

Competitors uses financial statements to compare their performance in the market. Competitors use these statements to set a Benchmark for their own. Competitors make their strategies based on Financial Statements of other Companies.

Apart from above other Users of Financial Statements are

  1. Customers,
  2. Employees,
  3. Government,
  4. Trade Unions,
  5. Lenders,
  6. Suppliers,
  7. Management, etc.

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

1:        Users of financial statements Identify at least three types of users of financial statements. Describe their...
1:        Users of financial statements Identify at least three types of users of financial statements. Describe their primary use of the financial statements and how the misstatement of those statements might injure the user. 2:        Overview of the Financial Statement Audit What is a financial statement audit, and what is the overall objective of the audit? What must the auditor do to accomplish this objective?
a) For which classification of users are financial statements prepared? What characteristic of these users makes...
a) For which classification of users are financial statements prepared? What characteristic of these users makes the development of generally accepted accounting principles necessary? b) Describe the three concepts from the Conceptual Framework that work together to create accrual accounting
What are the differences in the financial statement users for federal financial statements and state and...
What are the differences in the financial statement users for federal financial statements and state and local financial statements?
What is the purpose of a business's financial statements? Who are the primary users of financial...
What is the purpose of a business's financial statements? Who are the primary users of financial statements?
Thinking about the types of users: Internal and External users, How do each type of user...
Thinking about the types of users: Internal and External users, How do each type of user effect the accounting process in an organization? What types of users have the most impact and why? responses must be 100 words minimum.
Name three users of the financial statements and how misstatement of the statements may injure them?
Name three users of the financial statements and how misstatement of the statements may injure them?
Do you believe it is confusing to users for there to be two sets of financial...
Do you believe it is confusing to users for there to be two sets of financial statements for state and local governments--one set under modified accrual accounting and the other set under accrual accounting? Why or why not?
There are many information that might be useful for users of financial statements. How- ever, the...
There are many information that might be useful for users of financial statements. How- ever, the information are not always mandated in the form of accounting standard. A. Should all the accounting information be mandated for presentation and disclosure in financial statements by way of accounting standards? Why? B. What component/part of the Conceptual Framework should the standard setters use to decide whether an accounting standard should be issued for mandating or not mandat- ing the disclosure of accounting information?...
There are many information that might be useful for users of financial statements. How- ever, the...
There are many information that might be useful for users of financial statements. How- ever, the information are not always mandated in the form of accounting standard. A. Should all the accounting information be mandated for presentation and disclosure in financial statements by way of accounting standards? Why? B. What component/part of the Conceptual Framework should the standard setters use to decide whether an accounting standard should be issued for mandating or not mandat- ing the disclosure of accounting information?...
1.What types of financial statements can be prepared and what do they tell you?
1.What types of financial statements can be prepared and what do they tell you?2.What types of accounting records are required by a company according to legislation?3.Using a workplace you are working in currently, have worked in previously or online research, obtain two policies and procedures relevant to the preparation of financial reports. For each of these policies and procedures summarise the critical aspects of this.-You must also submit copies of the relevant policies and procedures for the assessors review.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT