Users of Accounting information

 

Users of Accounting information:

 

Accounting supplies financial information to various users. The users can be divided into two groups .One is internal users, another is external users.

 

Internal users :- Different level of managers of an organisation such as production manager, marketing manager, financial manager, etc. are internal users .They need accounting information for planning, organizing and controlling in the organisation to run the business efficiently. Accounting supplies internal reports so that the management may decide whether cash is sufficient or not to pay dividend  to shareholders, can business afford to increase the pay scale of employees? which product is profitable and what price of product maximizes the profit of the business?

 External users :- The external users are those users who are not directly engaged in the management. But they also need accounting information because they are interested to know the company's earnings, volume of profit of the concern and ability of the concern to pay back the debt in time being closely associated with the concern.

The following users are external users:

 i) Existing and potential shareholders : With the help of accounting information, existing shareholders  may decide whether to continue to keep the stock or sell it. Potential shareholders  need the accounting information to select alternatives for investments.

ii) Bankers and creditors : - Banks  need, accounting information to ascertain the ability of the concern to pay the principal amount of  loan taken by the concern and its interest. Smilarly, creditors want to be insured that  the concern will be able to pay back their claims in time.

 

iii) Government agencies: Mostly the business organisation has to submit its financial accounting information to different government agencies compulsorily. On the basis of financial information, government may decide to give permission for expansion of business, import or export ,etc. For this purpose,  government needs financial information.

 

iv) Public: The public also are the users of  acounting information. They need information  to find out employment opportunities as well as to know company’s responsibility towards  the society.

v) Employees: The employees need accounting information because their present and future economic condition depend on the concern.

 

vi) Suppliers : The suppliers supply the goods on credit to the concern most of the time. Therefore they need  information of the concerned organisation.

vi) Customers : The company which produce or  manufactures the best quality of product ,the customers want to know that the company is able to supply such type of goods continuously or not.