Question

List four important users of financial accounting and describe the use that each user would make of the information..

Answer 1

USERS OF FINANCIAL ACCOUNTING -

1) Owners - Stockholders need financial accounting information to help them in taking decisions on where to invest their money to get good returns

2) Lenders - Lenders like banks and financial institutions are interested in knowing about the ability of company of paying their liabilities on maturity.

3) Government - Government is interested for the purpose of taxation. Taxes are computed on the basis of the accounting books made by an entity.

4) Employees - Company's profitability and stability is important for employees to get good salaries and employee benefits. They may be interested in company's accounting to estimate the chances of their career development opportunities.

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