NOT an external user group?

NOT an external user group?

• A. Government
• B. Financial Institutions/Creditors
• C. Potential Investors/Creditors
• D. Employees

Answer: (D)

This item tests understanding of who counts as an external user of financial statements. External users are outside the company and rely on these statements to make decisions, such as government for taxation and regulation, financial institutions or creditors for lending assessments, and potential investors or creditors for evaluating risk and return. Employees are internal users because they are part of the organization and use internal reports to inform things like wages, benefits, and job security. Since employees are internal, they are not external users, which is why the correct choice is that employees do not belong to the external user group.

This item tests understanding of who counts as an external user of financial statements. External users are outside the company and rely on these statements to make decisions, such as government for taxation and regulation, financial institutions or creditors for lending assessments, and potential investors or creditors for evaluating risk and return. Employees are internal users because they are part of the organization and use internal reports to inform things like wages, benefits, and job security. Since employees are internal, they are not external users, which is why the correct choice is that employees do not belong to the external user group.