Financial Accounting and Report - Essay Example

different users of financial statements and their needs, the legal and regulatory influences on financial statements, the implication of the regulations for the users, the role of the accounting and reporting standards and how the information needs of different user groups vary. The first category of people who use financial information is investors. Investors who provide capital to a company are concerned about the levels of risk, and return from their investments. They need financial information to help them decide whether they should buy or sell shares of a particular company.

They are also interested in information that enables them to assess the ability of a company to pay cash dividend. The second category of people is employees. Employees need to know whether their employer is financially stable. They use this data to evaluate the employer’s ability to implement a fair remuneration package, provide retirement benefits and be able to offer employment chances (Lasher 2008, pp. 64). Lenders use financial information to access the ability of a company to promptly pay both the principal and interest on loans.

Suppliers and other trade creditors are interested in financial information to enable them to determine whether the amount owed to them will be paid without default. Customers are interested in financial information to determine the life span of an enterprise, especially when they have a long-term association with an enterprise such as the presenting solutions to both short and long-term problems. Government and their agencies use the financial information to regulate the activities of an enterprise and to determine tax policies.

They also use the information to compute national income. Lastly, the public use financial information to determine the trends and recent development activities of an enterprise to help them assess the possibility of a major economic contribution by an organization (Saudagaran 2009, pp. 51-56). To determine the regulatory