Question & Answer: The information needs of a specific user of financial accounting information depends upon the kind…..

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?