ACCA Applied Knowledge · Financial Accounting · Stakeholders' needs
Which of the following users of financial statements is able to demand specially tailored information from an entity, rather than relying solely on general purpose financial statements?
A bank that has lent to a small private company can demand specially tailored information, such as covenant reports, as a condition of lending. Investors, unions and the public generally cannot compel this and rely mainly on the general purpose financial statements the entity publishes.
- AA potential investor considering buying shares in a listed company
- BA bank that has lent money to a small private company and requires a covenant reportCorrect
- CA trade union representing employees of the company
- DA member of the public who lives near the company's factory
Explanation
A lender such as a bank can make lending conditional on receiving specific reports, so it can obtain information tailored to its needs. Potential investors, employee representatives and the public must rely largely on published general purpose financial statements. The distractors are wrong because those groups lack the power to require bespoke information.
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