b) The purpose financial statements is to provide information on the financial performance, position and changes in financial position the organization can be useful for a wide range of users in making financial decisions. I will explain how the impact of the main users of financial statements and what they can benefit from the financial statements; Investor; Investors are one example of internal users in the financial they concerned about the risk and return in respect of their investments. It requires the information to determine whether they should continue to invest in the business. They also need to be able to assess whether the business will be able to pay dividends, and measure the performance of the business, and controlling overall. …show more content…
The customers of the company's products, they have a long-term interest in the company's range of products and services. So it may be dependent on business for some products or services (Riley, 2016). o Objectivity The numbers on financial statements provide a clear and objective information about the situation in the Magee financial company, including how much earns or owes as debtor. This assessment clarity and quantifiable value is to make financial decisions such as when to cut costs or to invest in expansion, but it cannot be all business decisions on the basis of objective criteria and financial alone. Magee financial company may choose to consider the intangible variables, such as quality of life issues that affect staff and owners. o False Sense of Security Financial statements provide the employer with a false sense of security, limiting the practical business development. For example, the financial statements of the Company may appear that earn a profit and provide enough money to improve its bottom line. It looked good on paper, but these sales and profit numbers may depend on a sustainable business model, such as the sale of inventory that cannot be easily replaced. It should be business decisions based on real-time observations of business activities in addition to the financial statements information (Gartenstein, 2016).