Internal Users Of Accounting Information Include A Company's Stockholders. True Or False?

Important Example Of External User Of Accounting Information

This statement is “false”, as stockholders or shareholders are not participating in the decision-making process eventhough they become the owners of the corporation / company by buying stocks / shares, especially, in case of large and popular company, as they spread around the world, so they can’t make decision and control day-to day business’ operations. However, top management i.e., board of directors are internal users of company and they manage and control the business activities on the behalf of the owners of the company’s business. They are in a good position to manage the business operations and are held responsible for the performance and financial health of the company’s business. They define overall objectives & goals, set directions and make strategic planning to achieve those objectives and goals set in the strategic planning i.e., making vision, mission and objectives and goals for the company at corporate level which is to be followed at functional and bottom level management. They protect the interests of the shareholders of the business.

Stockholders have a share of return on each investment against the profits of the business made during the accounting cycle. They are interested in the Profitability and financial strengths of the business in order to get a fair return on their investment.