ACCA Applied Knowledge · Financial Accounting · Stakeholders' needs
Which user group of a company's financial statements is most directly concerned with assessing whether the company will be able to pay amounts owed to them within the normal credit period?
Trade payables, meaning suppliers, are most concerned with whether the company can pay what it owes within the credit period. They extend credit and so assess liquidity and short-term solvency, unlike investors, employees or tax authorities, whose main interests differ.
- ATrade payables (suppliers)Correct
- BEmployees seeking a pay rise
- CGovernment tax authorities
- DEquity investors assessing dividend growth
Explanation
Suppliers who sell on credit need to assess liquidity and the likelihood of being paid on time. Employees focus on stability and pay, tax authorities on taxable profit, and investors on returns and growth.
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