5 Questions
Which group below is not considered an external user of accounting information?
Managers and employees
Who among the following is typically interested in financial statements for decision-making purposes?
Present and potential investors
Which group is interested in financial information related to the company's ability to repay loans?
Creditors, lenders, and suppliers
Among the options, who is primarily concerned with a company's compliance with tax regulations?
Government and their agencies
Which group is particularly interested in financial data concerning the company's profitability and growth potential?
Present and potential investors
Study Notes
External Users of Accounting Information
- Creditors, lenders, and suppliers rely on accounting information to assess a company's creditworthiness and ability to repay debts.
- Present and potential investors use accounting information to make informed decisions about investing in a company.
- Government and their agencies utilize accounting information to regulate businesses, collect taxes, and monitor economic activity.
Exception: Internal Users
- Managers and employees within an organization use accounting information to make operational decisions, manage resources, and evaluate performance.
Test your knowledge on external users of accounting information by identifying which group does not belong among creditors, lenders, suppliers, investors, government agencies, managers, and employees.
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