Stakeholder
from class:
Financial Accounting I
Definition
A stakeholder is any individual or group that has an interest in or can be affected by the financial performance and activities of a business. Stakeholders include shareholders, employees, customers, suppliers, creditors, and the community.
5 Must Know Facts For Your Next Test
- Stakeholders rely on financial statements to make informed decisions about their interests in the company.
- Differentiating between internal (e.g., employees) and external (e.g., investors) stakeholders is crucial for understanding their varying needs.
- Financial performance indicators such as net income, cash flow, and equity are critical data points for stakeholders.
- The income statement, balance sheet, statement of owner's equity, and statement of cash flows provide essential information to stakeholders.
- Effective communication with stakeholders through accurate and transparent accounting practices is vital for maintaining trust and investment.
Review Questions
- Who are considered internal stakeholders in a business?
- Why do external stakeholders rely on financial statements?
- What types of financial information are most important to creditors?
© 2024 Fiveable Inc. All rights reserved.
AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.