The major users of accounting information are internal and external users. Internal users are those whomanage the business. External users are those outside the business who have either a present or potential financial interest.
Financial information may answer the following questions for internal users:
1.Is cash sufficient to pay our debts?
2.Can we afford to give our employees a raise this year?
3.What is the cost of manufacturing each unit of product?
4.Which product line is the most profitable?
Questions answered by financial information for external users include:
1.Is the company earning satisfactory profit?
2.How does the company compare in size and profitability with competitors?
3.Will the company be able to pay its debts as they come due?