Definition
Definition
Some of the ways external users employ accounting information include the following:
Stockholders have the right to know how a company is managing its investments
Federal and State Governments require tax returns and other documents often prepared
by accountants
Banks or lending institutions may use accounting information to guide decisions such
as whether to lend or how much to lend a business
Investors will also use accounting information to guide investment decisions
Government / IRS Government agencies that track and use taxes are interested in the
financial story of a business. They want to know whether the business is paying taxes
according to current tax laws. The language in which tax-related financial statements are
prepared is called IRC or Internal Revenue Code. Tax preparation will be outside the
scope of this course.