Question

Which of these would be considered as external user of the financial statements?

• A. Board of directors
• B. Shareholders
• C. Finance manager
• D. Production manager

Answer 1

Answer: (B)

Shareholders

Financial statement of the business are prepared on a periodic basis to check the health of the business. This is a statutory requirement also. There are internal and external users to view and refer the financial statement. Banks, financial institutions and investors are considered as external users. Investors are always look for a better returns from the business where they have invested the amount for which they have a tool i.e. financial statement.