Financial Statements and Users

The typical set of financial statements of company consist of:

• SOCI and SOFP

• SOCIE

• SOCF

• BUDGETS

• All the above

What is the purpose of preparing the Statement of Consolidated Income (SOCI)

• inform stakeholders of the profitability of the business

• inform stakeholders of the income and expenses of the business

• inform stakeholders of the nature of the business

• inform stakeholders of the size of the business

What is the purpose of the Statement of Financial Position (SOFP)?

• inform stakeholders of the assets and liabilities of the business

• provides information on how resources are obtained and used and the claim by the owner on the net assets of the business at a point in time.

• provides information on how resources are obtained and used in the business at a point in time.

• inform stakeholders of the owner's equity in the business

All of the following statements regarding the purpose of the Statement of Financial Position are correct except for?

• Shows assets, liabilities and owner's equity

• It is prepared at a point in time

• It can assist users, such as bank managers, with decisions

• Shows revenue, expenses and profit

The financial statement that reports whether the business earned a profit and also lists the revenues and expenses is called the:

• Statement of Financial position

• Statement of Changes in Equity

• Statement of Cash Flows

• Income Statement

Which group of users are most interested in financial statements to allow them to compare performance with previous years and other competitors. Identify areas of improvement and plan future resource allocation.

• Employees

• Managers

• Government

• Present Shareholders

Which group of users might use the financial statements to give them information on job security and provide them with a tool for future salary negotiations.

• Potential Shareholders

• Short term creditors

• Competitors

• Employees

Which group of users might use the financial statements to compare the profitability and future prospects of the company with others to ascertain the best investment option.

• Potential Shareholders

• Managers

• Authorities

• Employees

Which group of users are most interested in using the financial statements to help them make decisions on credit given?

• Managers

• Present Shareholders

• Trade Payables

• Auditors

This group of users might review the financial statements to ensure that the company adheres to all legal requirements - are they paying correct tax and VAT? Is the company compliant with Environmental and Health and Safety laws. Are any grants received being used appropriately?

• Long term creditors

• Management

• Authorities

• Competitors