Accounting information is used by external users and internal users.
External users include investors, creditors, customers, suppliers, employees and government. Internal users include the management, sales managers, production managers, purchasing managers and administrative staff of the entity.
Financial Accounting
Financial accounting is a branch of accounting that provides information to external users.
Managerial Accounting
Managerial accounting is a branch of accounting that provides information to internal users.
Review Questions
1. What is the objective of accounting?
The objective of accounting is to provide useful information for the decision making of users.
2. How are the users of accounting information classified?
External users and internal users
3. Who are the external users of accounting information?
Investors, Creditors, Customers, Suppliers, Employees and Government
4. Who are the internal users of accounting information?
Management, Production managers, Operations managers, Marketing managers and Administrative staff
5. What is the objective of financial accounting?
The objective of financial accounting is to provide useful information to external users.
6. What is the objective of managerial accounting?
The objective of managerial accounting is to provide useful information to internal users.