What Accounting Is: The Basics · Lesson 1 · 3 minutes
Who looks from outside
Name two outside groups who read business accounts.
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A new oven
Sara needs a loan for a new oven. She visits Tariq at the bank.
Outside eyes
Tariq asks to see bakery reports. He is an external user who makes decisions from outside.
Why does Tariq need to see Sara's reports?
- To check if the bakery can repay the loan.
- To bake bread with her team.
- Only owners are allowed to see bakery accounts.
Answer: To check if the bakery can repay the loan.
Banks check reports to ensure loans can be repaid.
Complete the rule about outside readers.
An ___ user reads company reports from the outside.
Answer: An external user reads company reports from the outside.
External users are people outside who read accounts.
Which two groups are external users of accounts?
- Banks that lend money.
- New investors buying a share.
- The head baker mixing dough.
Answer: Banks that lend money. / New investors buying a share.
Investors and banks both evaluate financial statements from outside.
Show how Tariq uses Sara's report.
This one uses your voice or your writing. It is in the Breni app.
Show why an outsider needs reports.
Answer: A bank lender past profit numbers whether to lend money
External users rely on reports to make decisions.
What to remember
- People outside a company read its financial reports.
- Banks and investors use reports to make lending and funding choices.
Next in this course: Inside vs outside numbers. It carries on in the Breni app.