Chapter 1, Problem 2E

Identifying accounting users and uses C2

Part A. Identify the following questions as most likely to be asked by an internal (I) or an external (E) user of accounting information.

______ 1. What are reasonable payroll benefits and wages?

______ 2. Should we make a five-year loan to that business?

______ 3. What are the costs of our products ingredients?

______ 4. Do income levels justify the current stock price?

______ 5. Should we spend additional money for redesign of our product?

______ 6. Which firm reports the highest sales and income?

______ 7. What are the costs of our service to customers?

Part B. Identify the following users of accounting information as either an internal (I) or an external (E) user.

______ 1. Research and development director

______ 2. Human resources director

______ 3. Nonexecutive employee

______ 4. Shareholders

______ 5. Distribution managers

______ 6. Creditors

______ 7. Production manager

______ 8. Purchasing manager