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CMA 1 | A1. 1 External Fin. Reporting Decisions


Companies prepare external financial statements to report their business information to outside observers, including potential investors and lenders. The objective of financial reporting is to provide information to users for decision-making.

There are many users of the financial statements produced by an organization.The users of accounting information include: the owners and investors, management, suppliers, lenders, employees, customers, the government, and the general public.

Users of Financial Statements

a. Direct Interests: i. Investors / potential investors ii. Suppliers / Creditors iii. Employees iv. Management

b. Indirect Interests: i. Financial Advisors & Analysts ii. Stock markets and exchanges iii. Regulatory authority

c. External Users: i. Investors ii. Creditors iii. Financial Advisors & analysts iv. Stock exchanges v. Regulatory authorities

d. Internal Users: i. Management ii. Employees 3.

Financial reporting includes:

a. Statement of Financial Position (Balance Sheet)

b. Income Statement

c. Statement of comprehensive income

d. Statement of changes in equity

e. Statement of cash flows

d.Notes to financial statements