Question 1
The management of Star processing company Ltd has met to review last year's financial statements and use it as the basis for the activities of this year. After the presentation by the financial controller, the chief executive officer who was the chairman of meeting retorted that the financial statements are for the consumption of the management and employees of the company. Assuming you were the marketing manager for this company and present at the meeting.
Required: a) State the other parties interested in the financial statements and identify one user need for each interested party.
Question 2
The observation of the following concepts is presumed in financial statement unless otherwise stated
(i). Going concern concept
(ii). Accruals concept
(iii). Business entity concept (iv). Prudence concept
(v). Historical cost concept Required:
a. Explain each of the above concept giving examples of how each is observed in the conventional financial statement.
b. Give or list two drawbacks of each of the above concept.
c. Name and explain briefly the four qualitative characteristics of accounting information that make financial statements useful to users.