Final answer:
It is true that external users of accounting information are not involved in daily operations but have a financial interest in a company. Investors like bondholders and shareholders need access to company financial information to decide on providing capital with the expectation of a return. This financial support is crucial for businesses lacking internal funds for investment.
Step-by-step explanation:
The statement that external users of accounting information have a financial interest in an entity but are not involved with the day-to-day operations of the enterprise is true. These individuals or entities, like bondholders and shareholders, may invest in a firm because they expect to obtain a rate of return on their investment. As a company becomes more stable and offers a clearer financial forecast, detailed knowledge of its management team becomes less critical. Instead, what attracts these outside investors is the availability of financial information such as revenues, costs, and profits, as well as the potential for profitability.
Many firms, from large corporations to small startups, require financial capital from outside sources to fund their operations or expand their businesses. They are willing to pay interest or share profits in exchange for capital, banking on the investors' interest in the expected returns. The provision of this financial capital is essential for the growth and sustainability of businesses that do not have sufficient internal funds.