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CHAPTER ONE INTRODUCTION
1.1 Background to the Study
Financial statements are the main means of communicating the affairs of the company
to all the stakeholders. They carry vital information required by the creditors, shareholders,
regulatory authorities and other interest groups such as the government and professionals.
These stakeholders have various but different items of interest in the financial statement as
they focus on items that protect their interest. For instance, while the creditors are concerned
with earnings before interest and taxes, the shareholders are more concerned with earnings
after interest and taxes among others. Despite these differences, all the various stakeholders
are, however, concerned with the relevance and reliability of the financial statement as a
Reliability is when the financial statement contains lowest possible error, bias and
You either get what you want or your money back. T&C Apply
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