Who are considered primary users of general purpose financial reports?

The primary users of general purpose financial reports are primarily investors and lenders because these groups rely on financial statements to make informed decisions regarding their investments and creditworthiness. Investors are concerned about the profitability and growth potential of an entity, which are directly reflected in the company's financial performance measures such as income, cash flows, and balance sheet information. Lenders utilize these reports to evaluate the risk associated with extending credit, ensuring the organization can meet its financial obligations.

General purpose financial reports aim to provide relevant and reliable financial information to a wide range of users who are not in a position to demand tailored reports. While regulatory agencies, employees, and government officials may also have an interest in financial reports, they do not represent the primary focus of these reports in the same way that investors and lenders do. For instance, regulatory agencies need financial information for compliance monitoring, and employees may focus on internal performance metrics rather than external financial reports. Government officials may assess the economic conditions through such reports but are not considered the core users for the purpose of investment or lending decisions.