Question

Give one example of internal users and one example of external users of accounting information?

Answer 1

Examples of internal users are owners, managers, and employees. External users are people outside the business entity (organization) who use accounting information. Examples of external users are suppliers, banks, customers, investors, potential investors, and tax authorities.

Answer 2

Internal users :-

♥ Owners - They contribute capital in the business and are exposed to maximum risk .

♥ Management - They make decisions such as determination of selling price , cost , etc...

♥ Employees - They are entitled to bonus at the end of the year which is dependant on the profit earned by the enterprise .

External users :-

♥ Banks - Provide loans to business by watching their performance . They assess it by analysing the accounting information .

♥ Creditors - Supply goods and services on credit . Before granting it , they analyse the credit worthiness of business .

♥ Researches - They use it in their research work .