ACCA Applied Knowledge · Financial Accounting · Stakeholders' needs
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 cannot require the entity to provide tailored information, so they rely on general purpose financial reports. Management and regulators can obtain what they need directly and are not the primary users.
- AExisting and potential investors, lenders and other creditorsCorrect
- BManagement of the reporting entity
- CTax authorities and regulators
- DEmployees and trade unions
Explanation
The Conceptual Framework states that 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 regulators can require specific reports, so neither is a primary user.
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