ACCA Applied Knowledge · Financial Accounting · Importance and purpose of analysis of financial statements
Which of the following statements about the information needs of employees as users of financial statements is correct?
Employees mainly want to know whether the entity is stable and profitable, because that shows its ability to keep paying wages, provide benefits and maintain jobs. They are not chiefly interested in tax computations, supplier credit terms or listing rule compliance.
- AEmployees are interested mainly in the entity's stability and profitability, as this affects job security and payCorrect
- BEmployees are interested only in the entity's tax computations
- CEmployees need information on the credit terms offered by suppliers
- DEmployees are mainly concerned with the entity's compliance with stock exchange listing rules
Explanation
Employees want to assess the entity's ability to continue to provide employment, remuneration, retirement benefits and job opportunities, which depends on stability and profitability. The other options describe needs of tax authorities, suppliers or regulators.
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