According to the IASB's Conceptual Framework: The objective of general-purpose financial reporting is to provide financial...

 

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According to the IASB's Conceptual Framework: "The objective of general-purpose financial reporting is to provide financial information about the entity that is useful to investors, lenders and other creditors in making decisions about providing resources to the entity". John Monroe has just started a micro-finance company in Jamaica and is now finalizing the procedures for granting loans to prospective firms. He has been told by his young accountant that he should request at least three years' financial statements from all potential clients in order to assess their credit worthiness. REQUIRED: Write a memo to John Monroe explaining the critical financial information that can be gained from the general-purpose financial statements provided by his potential clients to assist in the granting of credit. According to the IASB's Conceptual Framework: "The objective of general-purpose financial reporting is to provide financial information about the entity that is useful to investors, lenders and other creditors in making decisions about providing resources to the entity". John Monroe has just started a micro-finance company in Jamaica and is now finalizing the procedures for granting loans to prospective firms. He has been told by his young accountant that he should request at least three years' financial statements from all potential clients in order to assess their credit worthiness. REQUIRED: Write a memo to John Monroe explaining the critical financial information that can be gained from the general-purpose financial statements provided by his potential clients to assist in the granting of credit.

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