Internal users are people within a business organization who use financial 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.

Explanation: The primary users of accounting information are managers, accountants and bankers.

Internal users include managers and other employees who use financial information to confirm past results and help make adjustments for future activities. External users are those outside of the organization who use the financial information to make decisions or to evaluate an entity’s performance.

Managerial accounting focuses on internal users—executives, product managers, sales managers, and any other personnel within the organization who use accounting information to make important decisions. Managerial accounting information need not conform with U.S. GAAP.

Financial accounting information is used for decision making by external users, such as investors and creditors. Managerial accounting provides information for internal users. Managerial accounting information is used for decision making by internal users, such as the management or operational managers.

Some of the ways internal users employ accounting information include the following:

• Assessing how management has discharged its responsibility for protecting and managing the company’s resources.
• Shaping decisions about when to borrow or invest company resources.
• Shaping decisions about expansion or downsizing.

Following persons are users of accounting information.

• Owners/Shareholders.
• Managers.
• Prospective Investors.
• Creditors, Bankers, and other Lending Institutions.
• Government.
• Employees.
• Regulatory Agencies.
• Researchers.

Management. The core internal users are the managers. They need detailed performance information about each segment of the business, so that they can make ongoing corrections and enhancements to the organization.

The main objective of an internal managerial accounting system is to provide information to managers so they can make sound decisions. The goal is not to comply with outside demands, such as those of bankers, but rather to capture valuable data that can be used to manage and control a business better.

Examples of internal users are owners, managers, and employees. 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.

Internal Users of Financial Statements Managers are the primary users of financial statements because they need the information to do their jobs. They have to make decisions such as whether to add debt or how to maintain cash flow. Making those calls requires detailed knowledge about company finances.

T/F Management accounting is the generation of relevant information and analysis provided to external users. T/F The primary users of managerial accounting information are managers and decision makers.

Internal users include managers and owners of the business whereas external users include investors, creditors of funds, suppliers of goods, government agencies, general public, customers and employees. Internal users use a mix of management and financial accounting information.

Accounting supplies managers and owners with significant financial data that is useful for decision making. This type of accounting in generally referred to as managerial accounting. Some of the ways internal users employ accounting information include the following:

Management Management uses accounting information for evaluating and analyzing organization’s financial performance and position, to take important decisions and appropriate actions to improve the business performance in terms of profitability, financial position and cash flows.