Question

Are the following stakeholders internal or external users in a company? Would each use managerial or financial accounting?

1) Stockholders of a corporation
2) Marketing manager
3) Bank providing financial loans

Answer 1

Stockholders are external users relying on financial accounting, the marketing manager is an internal user using managerial accounting, and banks are external users also focused on financial accounting.

Step-by-step explanation:

The stakeholders mentioned can be categorized as internal or external, and they may use different types of accounting information based on their roles and interests in the company.

• Stockholders of a corporation are external users as they do not participate in the day-to-day operations of the company. They mainly rely on financial accounting information to make investment decisions and assess the overall performance of the company.
• The Marketing manager is an internal user who works within the company. This individual uses managerial accounting information to plan and control marketing campaigns and to make strategic decisions to drive sales and profitability.
• A Bank providing financial loans is an external user, which extends credit and financing to the company. Banks use financial accounting information to evaluate the creditworthiness of the company and monitor financial health for the duration of the loan.

Understanding the role of each stakeholder helps delineate the type of accounting information they use, whether it is managerial accounting, which is more detailed and internal, or financial accounting, which is broad and prepared for external scrutiny.