ACCA Applied Knowledge · Financial Accounting · The context and purpose of financial statements for external reporting
Which of the following users of financial statements is most likely to be primarily interested in whether a company can meet its loan interest payments and repay the loan principal when due?
Lenders are the users mainly concerned with whether the company can pay interest and repay the loan on time. They have lent money and so need information on liquidity and solvency, unlike employees, customers or tax authorities, whose interests differ.
- AEmployees
- BLendersCorrect
- CCustomers
- DGovernment tax authorities
Explanation
Lenders provide finance and need information on the entity's liquidity and ability to pay interest and repay capital on time. Employees focus on job security and pay, customers on continuity of supply, and tax authorities on taxable profits.
Did you get it right without looking?
One question tells you little. A timed set on The context and purpose of financial statements for external reporting shows your real accuracy, how long you take and where you lose marks.
More The context and purpose of financial statements for external reporting questions
- Which of the following is a key difference between financial accounting and management accounting?
- Zeta Co's directors argue that the financial statements show the directors' stewardship. Which statement correctly explains stewardship in t…
- Which of the following best describes the purpose of the external audit of a company's financial statements?
- Which of the following users of financial statements is most likely to be primarily interested in the entity's ability to pay interest and r…
- Which of the following best describes the main objective of general purpose financial statements prepared under IFRS?
- Under the IASB Conceptual Framework, which of the following best defines a liability?