Who are external users of accounting data? How does accounting provide relevant data to these users?

Solution

External users are individuals and organizations outside a company who want financial information about the company. The two most common types of external users are investors and creditors

Investors use accounting information to decide whether to buy, hold, or sell ownership shares of a company.

Creditors use accounting information to evaluate the risks of granting credit or lending money.

Source: Accounting Principles by Weygandt, Kimmel, & Kieso