This is the trial balance
Debit (₤) Credit (₤)
Bank 5,163
Buildings 55,000
Van 4,000
Shop fittings 5,200
Equipment 1,000
Capital 71,000

Cash 195
Purchases 5,500
Sales 5,150
Stationery 15
Cleaning 40
Lighting & heating 35
Motor expenses 52
Creditor 200
Debtor 150
SUM 76,350 ------ 76,350
•Closing stock was valued at ₤ 1,380 as at 31st December 2001

Question:
The client phone you up and ask you why he has to pay you to produce financial statements when he knows himself how much profit the company is making.
Required:
Explain to the client which others group may be interested in an organizations financial statements and why. Use relevant figures from your solutions to question one (prepare profit and loss acc, balance sheet - I've done already)

Anybody know about this type of this question, please help me to answer this question. Thanks you very much.

Tell him he's right. He doesn't need you. Although then, you kind of won't get that A on the assignment.

Financial Statements are more than just finding out how much money a company has made or loss.

External Users (other than him) who might need it are
- lenders (like a bank, and they can be a real hard @$$ when it comes to giving out loans)
- people who might want to invest in the company
- other owner's/shareholders
- to satisfy laws (if it's a public company trading on a stock exchange)

Quote:

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Originally Posted by CaptainForest

Tell him he’s right. He doesn’t need you. Although then, you kind of won’t get that A on the assignment.

Financial Statements are more than just finding out how much money a company has made or loss.

External Users (other than him) who might need it are
- lenders (like a bank, and they can be a real hard @$$ when it comes to giving out loans)
- people who might want to invest in the company
- other owner’s/shareholders
- to satisfy laws (if it’s a public company trading on a stock exchange)

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Thanks man, and do I need to build a worksheet approach to represent the relevant figures to answer this question, and how to do it?
Thanks

A worksheet approach to answer that question? I don't think so. I guess you could if you really wanted to.

I would answer this question in more of a word-based approach.