Question

Although accounting information is used by a wide variety of external parties, financial reporting is primarily directed toward the informational needs of:

A. Investors and creditors.
B. Government agencies such as the Internal revenue service.
C. Customers
D. Trade associations and labor unions

Answer 1

Financial reporting is primarily directed toward the informational needs of investors and creditors.

Step-by-step explanation:

The primary target audience for financial reporting is investors and creditors. Financial reporting provides these external parties with information about a company's financial performance, cash flows, and its ability to generate returns for investors and repay debts to creditors. Investors, such as individuals or institutions that purchase stocks or other securities, use financial reports to make informed decisions about buying or selling investments. Creditors, such as banks or bondholders, use financial reports to assess a company’s creditworthiness and determine whether to extend loans or credit.