FAQs
Primary users of the financial statements are considered existing and potential investors, creditors, and lenders. Primary users obtain financial statement information and allow them to understand the overall health of the company such as its net cash flow status etc.
What are the primary uses of financial statements? ›
The primary purpose is to track the movement of equity to shareholders and other stakeholders. It promotes transparency by disclosing the factors that have influenced the company's equity position, allowing stakeholders to gain insights into the financial health and performance of the business.
Who are the primary users of reports financial accounting? ›
There are three primary users of accounting information: internal users, external users, and the government (which is a specific form of an external user). Each group uses accounting information differently and requires the information to be presented differently.
Who are the main users of company financial statements? ›
The financial statements are used by investors, market analysts, and creditors to evaluate a company's financial health and earnings potential.
Who is primarily responsible for the financial statements? ›
The primary responsibility for the information provided in the financial statements rests with the internal accounting staff. They are responsible for preparing and maintaining the financial records of the company, ensuring accuracy and compliance with accounting principles and standards.
Who are the primary users of financial statements under the conceptual framework? ›
4 Throughout the Conceptual Framework, the terms 'primary users' and 'users' refer to those existing and potential investors, lenders and other creditors who must rely on general purpose financial reports for much of the financial information they need.
What are the three primary and most commonly used financial statements? ›
The income statement, balance sheet, and statement of cash flows are required financial statements. These three statements are informative tools that traders can use to analyze a company's financial strength and provide a quick picture of a company's financial health and underlying value.
Who are the primary and secondary users of financial statements? ›
Examples of internal users are owners, managers, and employees. External users are people outside the business entity (organization) who use accounting information. Examples of external users are suppliers, banks, customers, investors, potential investors, and tax authorities.
Who is not the primary users of the financial reporting information? ›
Answer and Explanation: The correct answer is a. Economic advisors . IFRS defines the primary users of financial statements and reports as existing and potential investors, lenders, other creditors, government agencies, and unions.
Who are the external users of financial statements? ›
External users of information include present and potential Investors (shareholders), Creditors (Banks and other Financial Institutions, Debenture holders and other Lenders), Tax Authorities, Regulatory Agencies (Department of Company Affairs, Registrar of Companies), Securities Exchange Board of India, Labour Unions, ...
The external users may be classified further into users with direct financial interest – owners, investors, creditors; and users with indirect financial interest – government, employees, customers and the others.
Who are the secondary users of accounting information? ›
External users include investors, lenders, suppliers, customers, government and the public who require information for various purposes.
Who are the users of consolidated financial statements? ›
Consolidated financial statements are typically prepared by a parent company that has a controlling interest in its subsidiaries, and they serve various stakeholders, including investors, lenders, regulatory bodies, and internal management.
Who bears responsibility for the financial statements? ›
Who bears ultimate responsibility for the financial statements? Management of the organization, equally with the external auditor that audits the statements.
Who is considered the primary party responsible for the accuracy of the financial statements? ›
The correct option is 3 - Management. Management is responsible for preparing and revealing the financial statements of the organization to the associated parties. Hence, the primary responsibility for the financial statements is on management.
Is the CEO responsible for financial statements? ›
Monitor company performance: A CEO is ultimately responsible for a company's financial performance. They may rely on financial or nonfinancial metrics to track how things are going.
Who are the users of financial reporting information? ›
The users of financial statements can include; Owners of a company, Company management, Investors/shareholders, Customers, Competitors, Government agencies, Employees, Investment analysts, Lenders, Suppliers/vendors, and General public.
Who are the users of management reports? ›
Management reports keep internal stakeholders "in the know" of company activities. They're among the internal reports managers and senior executives use to run the organization, make business decisions, and monitor progress.
Who are the users of annual report? ›
Current and prospective investors, employees, creditors, analysts, and any other interested party will analyze a company using its annual report.
