Users of accounting information

Question 1

Two types of users

Answer 1

Internal and External

Internal users of accounting information are business managers, sole propoetars and partners in a business.

External users of accounting information include
Shareholders

Question 2

Describe Internal Users of Accounting Information

Answer 2

Internal users are those within the business that will use information created by accountants within the business to make decisions.

Information created within the business include Income Statements, Balance Sheets etc.

Business managers, sole traders partners in the business will use this information to make decisions. For example if the Income Statement states that advertisng costs are highm, then the managers may decide to change their methods of advertising.

Question 3

Describe External Users of Accounting Information

Answer 3

People not working within the business will want access to business information such as profit and loss statements and balance sheets so that they can make decisions.

External users of accounting information includes shareholders or potential shareholders will want to know if the business is profitable before investing funds into the business.

Banks will want to know how much debt the business already has before deciding to lend more money to the business.
Australian taxation office will want to know about the profit earned by the business to accurately calculate taxation.