Answer to Question #95592 in Finance for John

Question

Different user group are interested in an entity's financial statement for different reasons.identify any four potential users groups and briefly describe the information which they may be interested in

Answer 1

Company management needs to track the profit and loss account to establish profitability of the organization in order to make informed financial decisions.

Customers intending to enter into large contract with a business entity checks the financial statements to examine the long term financial health and establish whether the business will honor its contractual agreement.

Employees also review the company's financial statements to establish the likelihood of bankruptcy that may render them jobless.

The government also examines the financial statements to check whether the business is tax compliant and take necessary disciplinary actions.