Users of financial statements

FA – Nov 2020 – L1 – SB – Q2 -Accounting Concepts (e.g., Going Concern, Accruals, Materiality)

Explain accounting concepts, provide examples, and list users of financial statements.

Question

a. Explain the term ‘accounting concepts’. (2 Marks)

b. With particular reference to the accounting treatments, explain the following accounting concepts:
i. Entity (2 Marks)
ii. Going concern (2 Marks)
iii. Accrual (2 Marks)
iv. Materiality and aggregation (2 Marks)
v. Consistency (2 Marks)

c. In accordance with IAS 1 – Presentation of Financial Statements, highlight six qualitative characteristics of general-purpose financial statements. (4 Marks)

d. Financial statements provide information to users, and each user’s information requirement is not always the same.

Required:
Using the table below and the example provided, list four users of financial statements and their information needs.

S/N	Users	Information Needs
1	Employees	Wage negotiation and determination of job security
2
3
4

(Total: 20 Marks)

Answer

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Tags: Accounting Concepts, Financial Statements, IAS 1, Materiality, Users of financial statements
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2020

FR – Nov 2018 – L2 – SC – Q7b – Conceptual Framework for Financial Reporting

Identify the potential users of financial statements and their likely information needs.

Question

Identify potential users of financial statements and their likely information needs.

Answer

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Tags: Financial Statements, Information Needs, Users of financial statements
Level: Level 2

Topic: Conceptual Framework for Financial Reporting
Series: NOV 2018

PSAF – Nov 2023 – L2 – Q5c – Financial statements discussion and analysis

Explain the objectives of financial reporting in the public sector and its usefulness to primary users.

Question

Financial reporting is not an end in itself but a means to an end. The end game of financial reporting is to provide value to the user of the information. In the local government, financial reporting must deliver the expected value to the users.
i) Explain the objective of financial reporting in the public sector.
ii) Explain the usefulness of financial statements of a Metropolitan Assembly to three of its primary users of the information.

Answer

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Tags: Accountability, Decision Making, Financial Reporting, Public Sector, Users of financial statements
Level: Level 2

Topic: Financial Statements Discussion and Analysis
Series: NOV 2023

FA – May 2021 – L1 – Q1 – Non-current assets and depreciation | The IASB’s Conceptual Framework

Explanation of stakeholders' interest in financial statements and preparation of a schedule for non-current assets with depreciation and revaluation adjustments.

Question

a) Explain why each of the following would be interested in the published financial statements of a company.
i) Shareholders
ii) Lenders
iii) Customers
iv) Suppliers
v) Financial analysts and advisers
(10 marks)

b) The following details were taken from the books of Suban Ltd for the year ended 31 July 2020.
i) Tangible non-current assets at cost as at 1 August 2019 were:

Item	Amount (GH¢)
Land and Buildings (Land GH¢120,000)	520,000
Motor Vehicles	310,000
Equipment	115,000

ii) Accumulated depreciation as at 1 August 2019:

Item	Amount (GH¢)
Land and Buildings	75,000
Motor Vehicles	110,000
Equipment	40,000

Suban Ltd depreciates non-current assets as follows:

Buildings: 3% per annum on cost.
Motor vehicles: 20% per annum reducing balance basis.
Equipment: 10% per annum on cost.
Depreciation is charged for each month of ownership.

iii) On 1 October 2019, Land was revalued at GH¢200,000.
iv) A Motor Vehicle purchased on 1 May 2018 for GH¢40,000 was sold on 1 February 2020.
v) All equipment as at 1 August 2019 had been purchased after 1 February 2013, except for one equipment which cost GH¢10,000 purchased on 1 August 2008.
vi) During the year, the following assets were purchased:

Motor vehicles GH¢35,000 on 1 November 2019.
Equipment GH¢20,000 on 1 February 2020.

Required:
Prepare the Schedule of Non-Current Assets for the year ended 31 July 2020.
(10 marks)

Answer

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Tags: Depreciation, Non-current Assets, Revaluation, Users of financial statements
Level: Level 1

Topic: Non-current assets and depreciation, The IASB’s Conceptual Framework
Series: MAY 2021

FA – May 2018 – L1 – Q1 – An introduction to business and Accounting | Control accounts and account reconciliations

Define a business, identify users of financial statements, and prepare control accounts with reconciliations.

Question

a) Accountancy is the language of business and the only profession that teaches students about business. A business primarily exists to make a profit, and one of the jobs of an Accountant is to prepare financial statements and determine the profitability of a business.
Required:
What is a business? (4 marks)

b) Identify FOUR users of financial statements and explain their information needs. (6 marks)

c) Mr. Patrick Mensah, a sole trader, has asked you to prepare the receivable and payable control accounts and ensure that the closing balances match with the list of balances. Currently, the closing balances as at 30 October 2017 are as follows:

Receivables Control Account: GH¢126,845
Payables Control Account: GH¢103,240
Receivables list of balances: GH¢123,589
Payables list of balances: GH¢104,476

On investigation, the following have been discovered:

A contra entry of GH¢3,250 has not been included in either control account.
Bad debt of GH¢1,680 has been written off in the list of balances but has not been included in the receivables control account.
The sales day book has been overstated by GH¢890, and this has not been reflected in the control account.
Purchase returns to Taifa, a supplier of GH¢256, have not been reflected in the control account.
An invoice amounting to GH¢981 for Obojo, a customer, has been entered in the sales day book as GH¢891.
A balance due to Amasaman, a supplier amounting to GH¢1,248, was not included in the list of balances.
Payment received from Amrahia, a customer for GH¢2,864, was posted to a supplier account Manhia mistakenly. The payment was correctly accounted for in the control account.
Goods purchased from a supplier Kasoa amounting to GH¢3,126 have been omitted from the relevant control account.
Bad debt recovered of GH¢300 relating to Tantra has not been updated in the list of balances but has been included in the control account.

Required: i) Based on the information provided above, prepare the Receivables and Payables Control Accounts for the year ended 30 October 2017. (8 marks)
ii) Prepare a statement reconciling the list of balances with the revised control accounts for Receivables and Payables for the year-ended 30 October 2017. (2 marks)

Answer

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Tags: Business definition, Payables Control Account, Receivables Control Account, Reconciliation, Users of financial statements
Level: Level 1

Topic: An introduction to business and Accounting, Control accounts and account reconciliations
Series: MAY 2018

FA – Nov 2020 – L1 – SB – Q2 -Accounting Concepts (e.g., Going Concern, Accruals, Materiality)

Explain accounting concepts, provide examples, and list users of financial statements.

Question

a. Explain the term ‘accounting concepts’. (2 Marks)

c. In accordance with IAS 1 – Presentation of Financial Statements, highlight six qualitative characteristics of general-purpose financial statements. (4 Marks)

d. Financial statements provide information to users, and each user’s information requirement is not always the same.

Required:
Using the table below and the example provided, list four users of financial statements and their information needs.

S/N	Users	Information Needs
1	Employees	Wage negotiation and determination of job security
2
3
4

(Total: 20 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting Concepts, Financial Statements, IAS 1, Materiality, Users of financial statements
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2020

FR – Nov 2018 – L2 – SC – Q7b – Conceptual Framework for Financial Reporting

Identify the potential users of financial statements and their likely information needs.

Question

Identify potential users of financial statements and their likely information needs.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Financial Statements, Information Needs, Users of financial statements
Level: Level 2

Topic: Conceptual Framework for Financial Reporting
Series: NOV 2018

PSAF – Nov 2023 – L2 – Q5c – Financial statements discussion and analysis

Explain the objectives of financial reporting in the public sector and its usefulness to primary users.

Question

Answer

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Tags: Accountability, Decision Making, Financial Reporting, Public Sector, Users of financial statements
Level: Level 2

Topic: Financial Statements Discussion and Analysis
Series: NOV 2023

FA – May 2021 – L1 – Q1 – Non-current assets and depreciation | The IASB’s Conceptual Framework

Explanation of stakeholders' interest in financial statements and preparation of a schedule for non-current assets with depreciation and revaluation adjustments.

Question

b) The following details were taken from the books of Suban Ltd for the year ended 31 July 2020.
i) Tangible non-current assets at cost as at 1 August 2019 were:

Item	Amount (GH¢)
Land and Buildings (Land GH¢120,000)	520,000
Motor Vehicles	310,000
Equipment	115,000

ii) Accumulated depreciation as at 1 August 2019:

Item	Amount (GH¢)
Land and Buildings	75,000
Motor Vehicles	110,000
Equipment	40,000

Suban Ltd depreciates non-current assets as follows:

Buildings: 3% per annum on cost.
Motor vehicles: 20% per annum reducing balance basis.
Equipment: 10% per annum on cost.
Depreciation is charged for each month of ownership.

Motor vehicles GH¢35,000 on 1 November 2019.
Equipment GH¢20,000 on 1 February 2020.

Required:
Prepare the Schedule of Non-Current Assets for the year ended 31 July 2020.
(10 marks)

Answer

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Tags: Depreciation, Non-current Assets, Revaluation, Users of financial statements
Level: Level 1

Topic: Non-current assets and depreciation, The IASB’s Conceptual Framework
Series: MAY 2021

FA – May 2018 – L1 – Q1 – An introduction to business and Accounting | Control accounts and account reconciliations

Define a business, identify users of financial statements, and prepare control accounts with reconciliations.

Question

b) Identify FOUR users of financial statements and explain their information needs. (6 marks)

Receivables Control Account: GH¢126,845
Payables Control Account: GH¢103,240
Receivables list of balances: GH¢123,589
Payables list of balances: GH¢104,476

On investigation, the following have been discovered:

A contra entry of GH¢3,250 has not been included in either control account.
Bad debt of GH¢1,680 has been written off in the list of balances but has not been included in the receivables control account.
The sales day book has been overstated by GH¢890, and this has not been reflected in the control account.
Purchase returns to Taifa, a supplier of GH¢256, have not been reflected in the control account.
An invoice amounting to GH¢981 for Obojo, a customer, has been entered in the sales day book as GH¢891.
A balance due to Amasaman, a supplier amounting to GH¢1,248, was not included in the list of balances.
Payment received from Amrahia, a customer for GH¢2,864, was posted to a supplier account Manhia mistakenly. The payment was correctly accounted for in the control account.
Goods purchased from a supplier Kasoa amounting to GH¢3,126 have been omitted from the relevant control account.
Bad debt recovered of GH¢300 relating to Tantra has not been updated in the list of balances but has been included in the control account.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Business definition, Payables Control Account, Receivables Control Account, Reconciliation, Users of financial statements
Level: Level 1

Topic: An introduction to business and Accounting, Control accounts and account reconciliations
Series: MAY 2018

Question Tag: Users of financial statements

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FA – Nov 2020 – L1 – SB – Q2 -Accounting Concepts (e.g., Going Concern, Accruals, Materiality)

Explain accounting concepts, provide examples, and list users of financial statements.

FR – Nov 2018 – L2 – SC – Q7b – Conceptual Framework for Financial Reporting

Identify the potential users of financial statements and their likely information needs.

PSAF – Nov 2023 – L2 – Q5c – Financial statements discussion and analysis

Explain the objectives of financial reporting in the public sector and its usefulness to primary users.

FA – May 2021 – L1 – Q1 – Non-current assets and depreciation | The IASB’s Conceptual Framework

Explanation of stakeholders' interest in financial statements and preparation of a schedule for non-current assets with depreciation and revaluation adjustments.

FA – May 2018 – L1 – Q1 – An introduction to business and Accounting | Control accounts and account reconciliations

Define a business, identify users of financial statements, and prepare control accounts with reconciliations.

FA – Nov 2020 – L1 – SB – Q2 -Accounting Concepts (e.g., Going Concern, Accruals, Materiality)

Explain accounting concepts, provide examples, and list users of financial statements.

FR – Nov 2018 – L2 – SC – Q7b – Conceptual Framework for Financial Reporting

Identify the potential users of financial statements and their likely information needs.

PSAF – Nov 2023 – L2 – Q5c – Financial statements discussion and analysis

Explain the objectives of financial reporting in the public sector and its usefulness to primary users.

FA – May 2021 – L1 – Q1 – Non-current assets and depreciation | The IASB’s Conceptual Framework

Explanation of stakeholders' interest in financial statements and preparation of a schedule for non-current assets with depreciation and revaluation adjustments.

FA – May 2018 – L1 – Q1 – An introduction to business and Accounting | Control accounts and account reconciliations

Define a business, identify users of financial statements, and prepare control accounts with reconciliations.

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FA – Nov 2020 – L1 – SB – Q2 -Accounting Concepts (e.g., Going Concern, Accruals, Materiality)

Explain accounting concepts, provide examples, and list users of financial statements.

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FR – Nov 2018 – L2 – SC – Q7b – Conceptual Framework for Financial Reporting

Identify the potential users of financial statements and their likely information needs.

You're reporting an error for "FR – Nov 2018 – L2 – SC – Q7b – Conceptual Framework for Financial Reporting"

PSAF – Nov 2023 – L2 – Q5c – Financial statements discussion and analysis

Explain the objectives of financial reporting in the public sector and its usefulness to primary users.

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FA – May 2021 – L1 – Q1 – Non-current assets and depreciation | The IASB’s Conceptual Framework

Explanation of stakeholders' interest in financial statements and preparation of a schedule for non-current assets with depreciation and revaluation adjustments.

You're reporting an error for "FA – May 2021 – L1 – Q1 – Non-current assets and depreciation | The IASB’s Conceptual Framework"

FA – May 2018 – L1 – Q1 – An introduction to business and Accounting | Control accounts and account reconciliations

Define a business, identify users of financial statements, and prepare control accounts with reconciliations.

You're reporting an error for "FA – May 2018 – L1 – Q1 – An introduction to business and Accounting | Control accounts and account reconciliations"

FA – Nov 2020 – L1 – SB – Q2 -Accounting Concepts (e.g., Going Concern, Accruals, Materiality)

Explain accounting concepts, provide examples, and list users of financial statements.

You're reporting an error for "FA – Nov 2020 – L1 – SB – Q2 -Accounting Concepts (e.g., Going Concern, Accruals, Materiality)"

FR – Nov 2018 – L2 – SC – Q7b – Conceptual Framework for Financial Reporting

Identify the potential users of financial statements and their likely information needs.

You're reporting an error for "FR – Nov 2018 – L2 – SC – Q7b – Conceptual Framework for Financial Reporting"

PSAF – Nov 2023 – L2 – Q5c – Financial statements discussion and analysis

Explain the objectives of financial reporting in the public sector and its usefulness to primary users.

You're reporting an error for "PSAF – Nov 2023 – L2 – Q5c – Financial statements discussion and analysis"

FA – May 2021 – L1 – Q1 – Non-current assets and depreciation | The IASB’s Conceptual Framework

Explanation of stakeholders' interest in financial statements and preparation of a schedule for non-current assets with depreciation and revaluation adjustments.

You're reporting an error for "FA – May 2021 – L1 – Q1 – Non-current assets and depreciation | The IASB’s Conceptual Framework"

FA – May 2018 – L1 – Q1 – An introduction to business and Accounting | Control accounts and account reconciliations

Define a business, identify users of financial statements, and prepare control accounts with reconciliations.

You're reporting an error for "FA – May 2018 – L1 – Q1 – An introduction to business and Accounting | Control accounts and account reconciliations"

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