Primary Users of General-Purpose Financial Reports

HI6025 Accounting
Theory and Current Issues
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Contents
Contents...........................................................................................................................................2
Question 1........................................................................................................................................3
Question 2........................................................................................................................................3
Question 3........................................................................................................................................4
Question 4........................................................................................................................................5
Question 5........................................................................................................................................6
Question 6........................................................................................................................................7
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Question 1
Primary users of general-purpose financial reports:
Following are main primary users of general-purpose financial reports like income statement,
statement of owner's equity, balance sheet and statement of cash flows, as follows:
 Investors – In organisation, both present as well as prospective investors offer, or can
offer risks capital as funding within business (Ellwood and Newberry, 2016). Investors
need to recognise what the yield/return to be expected from investments made, as well as
whether to make additional investment or not, or to sell existing holdings.
 Lenders – these kind of users are mainly banking corporation and other financial
institutions who require data/information that to assist them comprehend whether loans
provided by them will be properly repaid as due, as well as to determine as to provide
further loans to enterprise or not.
 Other Creditors – These mainly include business’s trade creditors or suppliers who
require information as to determine whether to sell products/services on credit-basis to
enterprise or not.
Question 2
Original cost
Asset cost 200000
Less: Accumulated depreciation 40000
Carrying amount 160000
Revalued amount 192000
Less: Carrying amount 160000
Revaluation surplus 32000
Replacement
Assets cost 240000
Less: Accumulated depreciation 48000
Revalued amount 192000
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