Internal users use financial information to plan, control and make decisions based on the situation and resources of business such as salary cost or cost of goods sold furthermore, the external users such as stockholders, suppliers and government's agency also need the financial report from the business such as general purpose financial. Effective internal control over financial reporting allows for more informed decisions by internal and external users of financial information t management needs to understand its risks to reliable financial reporting before determining which internal control would be most helpful to achieving its goal of reliable financial reporting. The internal users of financial statements are individuals who have direct bearing with the organization they may include: managers and owners : for the smooth operation of the organization , the managers and owners need the financial reports essential to make business decisions. Internal users or primary users of accounting information include: management - accounting information is of great assistance to management for planning, controlling and decision making process. External users are communicated accounting information usually in the form of financial statements the purpose of financial statements is to cater for the needs of such diverse users of accounting information in order to assist them in making sound financial decisions.
A) five users of company financial statements there are various internal and external users of company financial statements internal users include employees, directors and shareholders, while external users include the government, the public, suppliers and creditors. Companies prepare external financial statements to report their business information to outside observers, including potential investors and lenders in many cases, a company's external statements. Internal users would be managers so that they can make decisions about how to manage and also see how effectively they have managed external users would be potential investors, the government.
The users may be classified into internal and external users internal users refer to managers who use accounting information in making decisions related to the company's operations external users, on the other hand, are not involved in the operations of the company but hold some financial interest. There are two types of users (internal and external) list of internal users: employees management shareholders/owners list of external users: those who have economic transactions like suppliers creditors bankers financial institutions others like competitors government and regulatory agencies auditors researchers and academicians representatives of others interest like brokers, underwriters. Thus, we can say that financial statements are of a great significance for owners and management to know the solvency, profitability and capital structure of the firm (ii) external users: external users have limited authority, ability and means to access the required information. Thesis explores the internal users and uses of financial statements within the federal government to see if there is evidence that higher order benefits are being realized, namely the use of financial statements by executives and. External users of accounting information are parties outside the operation of a business who use its accounting and financial information in making important decisions examples include customers, investors, tax authorities, creditors and regulatory authorities.
Best answer: users and their information needs the users of financial statements include present and potential investors, employees, lenders, suppliers and other trade creditors, customers, governments and their agencies and the public. Financial accounting is the process that culminates in the preparation of financial reports on the financial reports on the enterprise for use by both internal and external parties whilst managerial accounting is the process of identifying, measuring, analyzing, and communicating financial information needed by management to plan, control, and. Financial statements are written records of a business's financial situation they include standard reports like the balance sheet, income or profit and loss statements, and cash flow statement.
Financial statement analysis is a method of reviewing and analyzing a company's accounting reports (financial statements) in order to gauge its past, present or projected future performance this process of reviewing the financial statements allows for better economic decision making. Financial accounting is a subsection of the general field of accounting that focuses on gathering and compiling data in order to present financial statements to external users in a usable form. Financial statements are used by both internal and external users to make economic decisions the information within the financial statement aims to provide information about the financial position, performance and any changes in financial position of an enterprise.
Internal users of financial information are much different than external users internal uses are typically managers and people who run the company they are concerned with using their knowledge about the business to improve performance and increase efficiencies within the company. Accounting information is helpful to any internal users, such as owners, managers and other employees, who want to understand a company's performance, according to accounting-simplifiedcom financial statements prepared for external users contain historical data that can be helpful in forecasting and evaluating products, departments and the company as a whole. Internal balance sheets: for reporting financial condition within your business, internal balance sheets include much more detail than external ones, either in the body of the financial statement itself or, more likely, in supporting schedules this figure shows an internal balance sheet for typical business, inc. Internal and external general-purpose financial statements can be used by external and internal users however, they are prepared pimarily for external users, such as the investors, lenders and creditors, and the government.