Chapter 1, Problem 2E

Exercise 1-2 Identifying accounting users and uses C2

Part A. Identify the following questions as most likely to be asked by an internal (1) 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 product’s ingredients?
• 4. Do income levels justify the current stock price?
• 5. Should we spend additional money for redesign of our product?
• 6. Should we spend additional money for redesign of our product?
• 7. What are the costs of our service to customers?

Part B. Identify the following users of accounting information as either an internal (1) or an external (E) user.

• 1. Research and development director
• 2. Human resources director
• 3. Politician
• 4. Shareholder
• 5. Distribution manager
• 6. Creditor
• 7. Production supervisor
• 8. Purchasing manager