Questions: 1
Which of the following users is not considered an external user of accounting information?
a. An Investor
b. The government
c. A manager
d. A creditor
Transcript text: 1
Which of the following users is not considered an external user of accounting information?
a. An Investor
b. The government
c. A manager
d. A creditor
Solution
The answer is C: A manager.
Explanation for each option:
a. An Investor: Investors are considered external users of accounting information because they are not involved in the day-to-day operations of the company. They use financial statements to make informed decisions about buying, holding, or selling their investments in the company.
b. The government: The government is an external user of accounting information. It uses financial data to ensure compliance with regulations, assess taxes, and analyze economic data for policy-making purposes.
c. A manager: Managers are considered internal users of accounting information. They use this information to make strategic decisions, plan, and control operations within the organization.
d. A creditor: Creditors are external users of accounting information. They use financial statements to evaluate the creditworthiness of a company and to make decisions about lending money or extending credit.