Answered

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BC Fruits Ltd, a fruit bottling and canning company, is planning to expand its operations. The directors
are hoping to increase the range of preserved fruit products and in doing so will need to invest in new
equipment. They are also hoping to open a new facility in the northern part of the country. The CFO has
been asked to prepare a report on the following issues of conceptual framework. You are the Finance
Controller of the company, and your CFO wants to address all issues in his report and has asked for your
assistance.
Prepare brief notes for the CFO, addressing each of the following and using the Conceptual Framework as
a source of reference:
(a) Identify potential providers of finance for BC Fruits Ltd and their information requirements in
respect of financial statements.
(b) Explain the terms 'performance' and 'position' and identify which of the financial statements will
assist the user in evaluating performance and position.
(c) Indicate why, for decision-making purposes, the financial statements alone

Sagot :

The potential providers of finance for BC Fruits Ltd will be commerical banks and the private investors.

Based on the information, the information requirements of the providers will be cash position, contingent liabilities, revenues, profit performance, etc.

Performance simply means the behavior over a particular period while position means the state of affairs on a particular date. It should be noted that while profit and loss statement reflects the performance of a business, the balance sheet shows the position of a company.

In conclusion, financial statements only shows the summary of financial transactions.

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