Users of the Income Statement

Question 1

What decision does a Bank Manager use the Income Statement for?

Answer 1

Bank Managers lend money to businesses.

The Bank Manager want to decide if the business can repay new or existing loans out of profit.

Question 2

What decision does an Employee use the Income Statement for?

Answer 2

The Employee is interested in the Business’s profit to decide if it is high enough to ensure their job will continue or to decide if to ask for a pay rise.

Question 3

What decision does the Inland Revenue Department use the Income Statement for?

Answer 3

The IRD is interested in making sure the business profit is accurate so they can decide if the correct amount of tax is calculated.

Question 4

What decision do the competitors use the Income Statement for?

Answer 4

The Competitor is interested in the business profit to decide if it is higher or lower than theirs. They will want to compare income and expenses of the business to theirs.
e.g. lower their distribution expenses by cutting delivery expenses.