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ACCA Applied Knowledge · Financial Accounting · The context and purpose of financial statements for external reporting

Under the IASB Conceptual Framework, which group is identified as the primary users of general purpose financial reports?

The primary users are existing and potential investors, lenders and other creditors. They provide resources to the entity and cannot require it to give them tailored information, so they depend on general purpose financial reports. Management, regulators and employees are not the primary users.

  1. AExisting and potential investors, lenders and other creditorsCorrect
  2. BManagement and the board of directors
  3. CGovernment agencies and regulators
  4. DEmployees and trade unions

Explanation

The Conceptual Framework states that the primary users are existing and potential investors, lenders and other creditors, who cannot demand information directly from the entity. Management can obtain information internally, and the other groups are not the primary focus, though they may find the reports useful.

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