Accouting

Part - A

The users of financial Statement and the reasons of their interest are described below:

1. Shareholders: It includes Equity as well as Preference Shareholders. Generally they are interested in knowing financial position of company. Equity Shareholders are interested in knowing Earnings per Share, value of Share in Market, Company’s long term plans so as to decide whether their investment is in safe hands and gives handsome return on their investment . Preference Shareholders are interested in Liquid position of Company to know whether dividend will be paid in time.

2. Financial Institutions: Company requires money for various purpose like for meeting day-to-day expenses, for starting new project etc. hence need funds for it. They may ask financial institutions and banks to facilitate their short term as well long term requirements. Such Institutions and Banks use financial statements to asses’ financial strength and weakness of Company. They also decide from Financial statements whether loan should be given or not, if given what would be the Rate of Interest to be charged, how much and what will be duration of installments etc.

3. Creditors: These are the persons from whom Company has purchased goods and other items on credit. They first review their financial statement to know financial position and capacity of it to pay the amount on time so that they do not lose their money.

4. Government: Government uses financial statements of Companies for different purpose like to analyze whether tax has been paid in accordance with the prevailing Act, to provide grant and to ensure that information is not diluted and rights of public are protected. Government also takes responsibility of prosecuting any offender of law.

5. Competitors: It includes existing as well as new entrants who review financial Statement to consider the likelihood of their success or failure in conquering market. Their primary interest lies in...