Accounting is related with recording and maintaining books of accounts of company. It helps in understanding the financial position of company like - what assets and liabilities company have ? what was profit earned by company in accounting period ? also it provides information regarding all the financial transactions occurred during an accounting period. The main question is why and who need accounting information ? So in this article we are going to discuss about the various users of accounting information and their needs catered by accounting records.
Users Of Accounting Information
Internal Users
Owner
Owner is the one who has contributed capital for starting the business. So owners also want the accounting information to understand that whether money invested by them in the business is being used properly or not and also what is the result of the operations undertaken by the company.
Management
With the help of accounting information, management can understand more precisely about the profit earned or loss incurred by the company as well as its financial position. This information can help management in better planning, controlling and decision-making.
Employees
Employees are the ones who are working in the company. the three main para meters which affect employees are : salary, job security and bonus schemes. They look accounting information to understand more about the result of the operations of the company and how it can affect them. If the company earns bumper profits then employees can demand for more and more increments in their salary also this will help in ensuring their job security and they can be be confident that company is having sufficient funds to pay salaries on time.
Lenders
Lenders are the ones who have supplied funds to the organization for short term or long term basis. They want to ensure the creditworthiness of the company that whether company will be able to pay the principal amount along with interest or not. In order to assess it properly they need the accounting information.
Investors
This includes the stakeholders who have invested money in business as capital. They want to know about the risk and returns associated with the investment and whether they should continue to hold on the shares or dispose them. Accounting information helps them understanding all this in a better manner.
Potential Investors
Potential investors are the one who could become the investor of company in future. They look the accounting information of company to decide that whether they should invest their money in specific company or not.
Suppliers
Suppliers are the one who are supplying goods or services to the company maybe on cash basis or credit basis. They to know about financial affairs of the company to ensure that in case of credit sale they will receive payments on time.
Customers
Usually industrial customers are interested in accessing the financial records of company to ensure the regular supply of raw material so that their production is not hampered.
Government
Government bodies also need the information about the financial records of the company to ensure that they are complying with the various regulations in practice. In addition to this, government has a responsibility to ensure that the information is not distorted or delusive and the rights of the public are protected and for serving this purpose gone with me ask their officials to examine the accounting records of a business.
Auditors
Various stakeholders rely on the financial statements audited by the auditors so for purpose of conducting audit properly they need the accounting information.
Public
General public which may include academicians, analysts, researchers and journalist may also be interested in financial information.
For watching you tube video on this topic click on the following link :
1 Comments
So nice and very easily understandable notes you have provided ,thank you so much for your great efforts
ReplyDelete