Users of Accounting Information :
The basic objective of accounting is to provide information which is useful for persons and groups inside and outside the organisation.
I. Internal users: Internal users are those individuals or groups who are within the organisation like owners, management, employees and trade unions.
II. External users: External users are those individuals or groups who are outside the organisation like creditors, investors, banks and other lending institutions, present and potential investors, Government, tax authorities, regulatory agencies and researchers.
Users of Accounting Information
The users and their need for information are as follows:
Users | Need for Information |
Internal | |
i. Owners | To know the profitability and financial soundness of the business. |
ii. Management | To take prompt decisions to manage the business efficiently. |
iii. Employees and Trade unions | To form judgement about the earning capacity of the business since their remuneration and bonus depend on it. |
External | |
i. Creditors, banks and lending institutions | other To determine whether the principal and the interest thereof will be paid in when due. |
ii. Present investors | To know the position, progress and prosperity of the business in order to ensure the safety of their investment. |
iii. Potential investors | To decide whether to invest in the business or not. |
iv. Government and Tax authorities | To know the earnings in order to assess the tax liabilities of the business. |
v. Regulatory agencies | To evaluate the business operation under the regulatory legislation. |
vi. Researchers | To use in their research work. |