Question

In: Accounting

Thinking about the types of users: Internal and External users, How do each type of user...

Thinking about the types of users: Internal and External users, How do each type of user effect the accounting process in an organization? What types of users have the most impact and why?

responses must be 100 words minimum.

Solutions

Expert Solution

There are two types of users :

1. Internal Users: They are parties, within the business. Some of them are -

a) Management: It requires information about each segment of the business. Their objectives is to establish steady or increasing level of cash flow. They also establish prudent level of debt risk.

b) Owners: Investors require accounting information to calculate  return on investment.

c) Employees: They can use it to calculate ability of business to pay an adequate level of compensation and extra benefits.

Keeping all these internal parties in mind, business has to present and prepare it's accounts. All these users affect accounting process.

2. External Users: They are affected by the organisation's account information. They have either direct or indirect interest. Some of them are -

a) Creditors: They use information to estimate the ability of borrower to repay the loan, the number of assets and liabilities, proof of income etc. before he lends amount to the economic entity.

b) Investors: Investor views financial report for estimating the possibilities of the organisation in future to make sure that the investment is secure.

c) Trading partners: Associate trading companies views at the accounts and decide to trade or not.

d) Government Regulatory Agencies: They can keep a check and it allows to overview economy and market.

e) Lawmakers and economic planners: The accounts provides information that is important for making changes in laws.

Keeping all these external parties in mind, business has to present and prepare it's accounts. All these users affect accounting process.

Internal Users are the most important and they have maximum impact on the business. They include 'Owners' who take crucial decisions of organization. They make profit and also handle losses.


Related Solutions

Identify at least 2 internal users and 1 external user. Based on the demo and readings,...
Identify at least 2 internal users and 1 external user. Based on the demo and readings, briefly explain how their needs for health data are met. (10 points) How is the social history structured and formatted? What purpose does the social history serve in the overall patient care? Does the particular social history depicted in the video fully satisfy the intended purpose? (10 points) Identify at least 5 abbreviations that you saw in the video demonstration. What are the general...
Identify the following users as either external users (E) or internal users (I). a) Customers b)...
Identify the following users as either external users (E) or internal users (I). a) Customers b) Suppliers c) Brokers d) Business press e) Managers f) District attorney g) Shareholders h) Lenders i) Sales clerks j) FBI and IRS k) Consumer group
Discuss the differences between internal and external users of information ..
Discuss the differences between internal and external users of information and their needs and demands on an information system. Historically, which type of user has the firm catered to most? 
Differentiate between internal and external stakeholders with two examples of each type.
Differentiate between internal and external stakeholders with two examples of each type.
Differentiate between internal users and external users and explain the examples of the accounting information required.
Differentiate between internal users and external users and explain the examples of the accounting information required.
There are external and internal users of accounting information. Which of the following will be considered...
There are external and internal users of accounting information. Which of the following will be considered as an external user of accounting information for Gizmo Traders? (a) Employees, investors and lenders of Gizmo Traders (b) Investors and lenders of Gizmo Traders as well as government and their agencies. (c) Management, employees and customers of Gizmo Traders. (d) The general public, customers of Gizmo Traders and Gizmo Traders suppliers and other trade creditors. (e) Employees and lenders of Gizmo Traders as...
why are owners considered external users of financial information while board of directors are internal users.
why are owners considered external users of financial information while board of directors are internal users.
The ultimate goal of accounting is to provide both internal and external users with information that...
The ultimate goal of accounting is to provide both internal and external users with information that is relevant and reliable for their decision making purposes. US companies are subject to various reporting requirements, as mandated by the Securities Exchange Commission. Go to the U.S. Securities & Exchange Commission site Use Edgar to find the 12-31-2017 Annual Report (10K) for Southwest Airlines and respond to the following questions. 1.) What amounts did Southwest report for the following items for the year...
what type of document is the budget? Internal or external?
what type of document is the budget? Internal or external?
What two types of services do internal auditors provide? Provide three examples of each type of...
What two types of services do internal auditors provide? Provide three examples of each type of engagement. What steps are included in the planning phase of an assurance engagement? What is the relationship between business objectives and business assertions? What does "inherent risk" mean? What elements do well-written observations include? What is the difference between "negative assurance" and "positive assurance?" What information must final assurance engagement communications include?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT