Question

115 VCCV cart of the financial data. Let's explore how these users utilize accounting information and process business transactions. 1) Please identify two types of external users and describe how they use accounting information.

Answer 1

Answer:

External users are

• Creditors
• Investors
• Government
• Trading partners
• regulatory agencies
• Journalists

External users of accounting information:

External users are those individuals who take interest in the accounting information of an organization, but they are not part of the organization's administrative process.

External users have a direct or indirect interest in accounting information.

Financial accounting is the process for the preparation of financial reports of the enterprise for use by both internal and external parties.

These reports are important to the external users of the accounting information.

Creditors and investors are the most regular examples of external users among many other external users.

Their use accounting information is below.

creditors:

Creditors or lenders use the accounting information to find out the ability of the Borrower to repay the Loan,the number of assets and liabilities of the borrower, evidence of income, economic position,etc.. before he or she lend the money To the economic entity.

Investors:

Investors are the capital providers of a business.

Before investing,an investor sees the financial reports for figuring out the possibilities of the business in the future.financial information is important for an investor for making sure that the investment is secure.