ACCA FA · Chapter 1 · Question 2 of 10
Which user group is MOST likely to use financial statements to assess the stability and profitability of an entity as an indicator of its ability to pay remuneration and offer continuing employment?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Employees
Explanation
Employees and their representatives are concerned with the stability and profitability of their employer, because this indicates job security and the ability to pay wages, pensions and other benefits. Lenders focus mainly on whether loans and interest will be repaid, customers on continuity of supply, and government on tax, regulation and statistics.
More The context and purpose of financial reporting MCQs
- Q4Which of the following is a feature of a limited liability company?
- Q5Which body is responsible for developing and issuing IFRS Accounting Standards?
- Q6What is the main role of the IFRS Interpretations Committee?
- Q7Which of the following statements regarding responsibility for the financial statements of a limited liability company is correct?
- Q8Within a system of corporate governance, which of the following is a key role of non-executive directors?