Exercise 2:

Match the financial statement users and other parties involved in the use of and preparation of financial information with their role.

Financial Statement

Users and Other Parties Role

Equity Investors 1. Are banks and other financial institutions that lend money to the company.

Creditors 2. Use financial statements to determine whether to conduct business or purchase

products from a company.

Financial Analysts 3. Use financial information to determine their market position relative to the reporting

entity and to attempt to identify future strategies of the reporting entity.

Employees and Labor Unions 4. Are independent of the company and responsible for ensuring that management

prepares and issues financial statements that comply with accounting standards

and fairly present the financial position and economic performance of the company.

Suppliers and Customers 5. Use financial information to review and analyze reported results of the companies they

cover and make investment recommendations.

Government Agencies 6. Are employees of the company serving in an advisory role to management. They

provide information to management regarding the companys operations

and proper functioning of its internal controls.

Competitors 7. Review the financial statements of publicly traded companies for a variety of reasons that

are in the public interest.

External Auditors 8. Use financial information during negotiation of new labor

agreements and compensation contracts.

Internal Auditors 9. Support accounting professionals throughout their careers by providing training,

professional skills development, and other resources.

Regulatory Bodies 10. Are shareholders of the company.

Professional Organizations 11. Protect investors and oversee the accounting and auditing standard setting processes.