a. The following are the stakeholders who make use of financial statements and how financial statements fulfill their information needs:

1. Owners/Investors: They need accounting information to assess the profitability of the business, evaluate management performance, and make investment decisions. The statement of profit or loss and statement of financial position provide insights into the financial performance and financial health of the business.
2. Management: They require financial information to plan, monitor, and control business activities. The statement of cash flows, along with profit and loss statements, helps management evaluate operational efficiency and financial planning.
3. Employees: Employees are interested in the profitability and sustainability of the business, as it impacts their job security and benefits. They use the statement of profit or loss to evaluate how well the company is doing and whether it can continue to offer them employment.
4. Creditors and Lenders: Creditors use financial statements to evaluate the company’s ability to repay loans and meet financial obligations. They focus on the statement of financial position and the statement of cash flows.
5. Government/Regulators: The government uses financial statements to determine the tax liabilities of the business and ensure compliance with financial regulations. Tax authorities rely on the statement of profit or loss for this purpose.
6. Suppliers: Suppliers look at financial statements to assess the company’s liquidity and creditworthiness, ensuring that the company can pay for goods or services supplied. The statement of financial position helps assess short-term liquidity.