Users of accounting information includea)Trade payables/ Suppliersb)Le...
The correct answer is 4 - all of the above.
Users of accounting information include various stakeholders who have an interest in a company's financial performance and position. These stakeholders can use accounting information to make decisions regarding their engagement with the company. The users of accounting information can include trade payables/suppliers, lenders, customers, investors, regulatory authorities, employees, management, and others. All of the options given in the question - trade payables/suppliers, lenders, and customers - are users of accounting information, but there are also many others.
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Users of accounting information includea)Trade payables/ Suppliersb)Le...
**Explanation:**
Accounting information is used by various stakeholders to make informed decisions about a business. The users of accounting information can be categorized into internal and external users. Internal users are individuals within the organization who use accounting information for decision-making purposes, while external users are individuals or organizations outside the business who rely on accounting information to assess the financial health and performance of the company.
The correct answer to this question is option 'D' - all of the above. Let's explore the reasons why each of the mentioned stakeholders is a user of accounting information:
**a) Trade payables/ Suppliers:**
- Trade payables or suppliers are external stakeholders who provide goods or services to a business on credit.
- These suppliers rely on accounting information, such as financial statements, to assess the creditworthiness and financial stability of the company they are dealing with.
- They use this information to evaluate the likelihood of receiving payment for the goods or services provided.
**b) Lenders:**
- Lenders are external stakeholders who provide financial resources to a business in the form of loans or credit facilities.
- Lenders require accounting information to assess the creditworthiness and financial position of the company before extending credit.
- They use financial statements, such as the balance sheet and income statement, to evaluate the company's ability to repay the borrowed funds and the overall financial health of the business.
**c) Customers:**
- Customers are external stakeholders who purchase goods or services from a business.
- Accounting information is important to customers as it helps in evaluating the financial stability and sustainability of the company.
- Customers may use this information to assess the ability of the company to fulfill their orders, provide after-sales services, or to gauge the overall reliability of the business.
**In conclusion,** accounting information is vital for various stakeholders, including trade payables/suppliers, lenders, and customers. These stakeholders rely on accounting information to assess the financial health, stability, and creditworthiness of the business.
Users of accounting information includea)Trade payables/ Suppliersb)Le...
D is the right answer
Trade payables/supplies: Since they supply goods to the firm on credit , they use financial information to know whether the firm will be able to settle the dues or not.
Lenders: They lend money to the firm. They have to ensure the firm would be able to pay back the money with due interst.
Customer: Customers purchase goods from the firm They prefer to deal with long-standing and trust worthy companies also to have quality and standard products.