CAIE IGCSE Business Studies 5.5.3 users of accounts

Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Award up to 2 marks for a justified decision as to whether banks are the main external users of the accounts of a business.

Points might include:

Banks:

- Whether to give a bank loan [k] to see if a business can repay [an]

- Whether a business can repay loans/overdraft [k] as this will influence the terms/interest rate/period of the loan [an]

- To help decide the interest rate to set [k] to reflect the level of risk [an]

- To decide the amount to lend [k]

- Check interest payments can/are being made [k]

Other users might include:

Government [k]:

- Want to check the profit [an] / to know the correct amount of tax has been paid/will be paid [an]

Suppliers/Trade payables [k]:

- Assess/shows liquidity position [an] to know whether the business is likely to be able to repay them [an]

- See level of debt [an]

Other appropriate responses should be credited.

This is a general question so there are no marks for application.

Some points can be [k] or [an] but do not award the same point twice.

[K] can be awarded for identifying what information the user is looking for, or how they would use the accounts.

Some points can be awarded for different external users but only award once.
Justification might include:

Banks will use the accounts to check whether a business can repay loans [k] as this is likely to influence the interest rate offered [an]. Suppliers [k] will want to know the liquidity position of a business [an]. Banks are likely to be the main external users of accounts because banks often lend large sums of money [eval], whereas suppliers may be less interested in the accounts if orders are small [eval].