Show Answer-The answer is option b. Management Explanation- Users who are internal users or external users of financial information can be distinguished. Internal users are those organizations or people who are directly involved in the way that business is conducted and who predominantly use the company's current accounting system. They are interested in knowing the company's financial performance and position and are known as external users, on the other hand. The management, staff, and business owners are typically the internal users. The explanation for other options a. Internal Revenue Service agent- They are external users they are not a part of the management of the company. c. Creditors-They are people who provide goods on credit to the company on the basis of their financial status therefore they are the external users.  1 The primary purpose of accounting is to determine whether the business entity is profitable or unprofitable in its operations. 2 Costs, prices, sales volume, profits, and return on investment are all accounting measurements. 3 The types of accounting information are limited. 4 Accountants use the term financial position to describe an entity's activities during the year. 5 Financial accounting information is designed primarily to assist investors and creditors in deciding where to place their scarce investment resources. 6 Management accounting involves the development and interpretation of accounting information intended specifically to aid management in acquiring investment resources. 7 The most challenging aspect of tax accounting is in the preparation of the many forms required for an entity's tax return. 8 An accounting system consists of personnel, procedures, devices, and records used by an organization to develop accounting information and to communicate this information to decision makers. 9 The cost of producing the types of accounting reports required by law is always cost-effective. 10 External users of financial accounting information are the same users of management accounting information. 11 Return of investment and return on investment refer to the same thing--the amount returned at the end of the investment period. 12 If you invest $50,000 and receive $52,500 at the end of the investment period, the return on your investment is 5 percent. 13 The primary financial statements are an income statement and a balance sheet. 14 One financial statement that covers a specific period of time is the balance sheet. 15 Externally reported financial information and financial statements are primarily historical in nature. 16 Management accounting is the preparation and use of accounting information systems to achieve the organization's objectives by supporting decision makers outside the enterprise. 17 Plant managers are internal users of accounting information systems. 18 The management accounting information created and used primarily by internal users is intended above all for planning and control decisions. 19 One of the specific purposes of management accounting system is to provide information useful to help the enterprise achieve its goals, objectives, and mission. 20 Standards adopted and used as a guide in measuring, recording, and reporting the financial affairs and activities of a business are known as accounting concepts. 21 Today, the most authoritative source of generally accepted accounting principles is the Financial Accounting Standards Board (FASB). 22 The primary purpose of the conceptual framework for financial reporting is to provide guidance to the FASB in developing new accounting standards. 23 The Securities and Exchange Commission is a governmental agency with the legal power to establish accounting principles and financial reporting requirements for publicly owned corporations. 24 The main purpose of the internal control structure is to detect fraud. 25 Uncovering fraud is the primary purpose of an audit. 26 The major purpose of an audit is to uncover theft and fraud so that the users of the financial statements can have a high level of assurance that all money is accounted for properly. 27 The American Institute of Certified Public Accountants licenses certified public accountants. 28 Whichever career in accounting you choose, public, management, financial forecasting, cost accounting, internal auditing, government accounting, or accounting education, it is your obligation as a professional to serve the public's best interest, even at the sacrifice of personal advantage. 29 The American Institute of Certified Public Accountants issues the Certificate of Management Accounting (CMA). 30 The code of ethics of the Institute of Management Accountants (IMA) includes the requirements of competency, confidentiality, integrity, and subjectivity. 31 Which of the following provides information about the financial resources, obligations, and activities of an economic entity that is intended for use primarily by external decision makers? 32 Which of the following provides information that is intended primarily for use by internal management in decision making required to run the business? 33 Which of the following involves the preparation of income tax returns and anticipating the tax effects of business transactions and structuring them in such a way as to minimize the income tax burden? 34 Which of the following involves determining the cost of certain business activities and interpreting cost information? 35 Which of the following refers to recording the routine transactions and day-to-day record keeping of an enterprise? 36 An accounting system is cost-effective when it does which of the following? 37 The basic functions of an accounting system include which of the following? 38 Which of the following financial statements is also known as a statement of financial position? 39 The personnel, procedures, devices, and records used by an organization to develop accounting information and communicate that information to decision makers are called which of the following? 40 The two things that make up cash flow prospects are which of the following? 41 Which of the following shows details and results of the company's profit-related activities for a period of time? 42 Which of the following shows the details of the company's activities involving cash during a period of time? 43 Which of the following would be considered an external user? 44 You made a $10,000 loan to your cousin's company. At the end of one year, the company returned to you $10,850. The $850 is called which one of the following? 45 A characteristic of externally reported information is that it is which of the following? 46 Which of the following would be considered an internal user? 47 Which of the following is not a characteristic of management accounting information? 48 Which of the following provides the framework for determining what information is to be included in financial statements and how that information is to be presented? 49 Measures used by an organization to guard against errors, waste, and fraud; to assure the reliability of accounting information; to promote compliance with management policies; and to evaluate the level of performance of all divisions of the company, are called which of the following? 50 Which of the following enhances the integrity of accounting information? 51 Which of the following is a professional accounting organization that is dedicated to the promotion and development of the practice of internal auditing? 52 Which of the following is a professional accounting organization that intends to influence the concepts and ethical practice of management accounting and financial management? 53 Which of the following is a professional accounting organization of certified public accountants that engages in a variety of professional activities, including establishing auditing standards, conducting research, and working closely with the FASB in establishing financial reporting standards? 54 The membership of which of the following consists primarily of accounting educators? 55 An investigation of financial statements designed to determine their fairness in relation to generally accepted accounting principles is called which of the following? 56 Which of the following issues a Certificate in Internal Auditing? 57 Which of the following issues a Certificate in Management Accounting? 58 Which of the following issues licenses to practice as a Certified Public Accountant? 59 Expectations of ethical conduct are important for accountants. For management accountants, the code of ethics includes which of the following requirements? 60 Which of the following is not a government agency? Who are considered as external users of accounting information?External users are people outside the business entity (organization) who use accounting information. Examples of external users are suppliers, banks, customers, investors, potential investors, and tax authorities.
Which of the following is an external user?External users of financial information may include the following: owners, creditors, potential investors, labor unions, governmental agencies, suppliers, customers, trade associations, and the general public.
Which of the following is not considered an external user of accounting information?Answer and Explanation: d) Managers are not considered external users of financial statements. Managers are internal users of the financial information for planning and decision making. Creditors and labor unions have a significant role in the business and are external users of financial statements.
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Which of the following would be considered an external user of accounting information?
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