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Users of Accounting Information

Generally the users of accounting information are classified into two categories:

  • Internal users or owners
    • Management Team / Board of Directors / Partners/ Shareholders: The owners or management, as a whole, is interested in the accounting information for various managerial decisions. Accounting helps the management to plan and control the business in an effective and efficient manner.
  • External users or outsiders
    • Short term creditors (suppliers of goods): Short term creditors need information to determine whether the amount owed to them will be paid on time and to fix the credit policy to the customer.
    • Long term creditors (loan creditors): Long term creditors need information to determine whether the principal and interest due to them will be paid on time.
    • Present and potential investors: Present and potential investors need information to judge the prospects of the enterprise and determine whether they should invest in the shares of the Company.
    • Employees: Employees need information to determine the stability and profitability of the employer which enables them to assess the ability of the enterprise to pay remuneration and other retirement benefits.
    • Government agencies: Government agencies need information to regulate the functioning of a business enterprise for public welfare and to assess the tax liability of the enterprise.
    • Customers: Customers need information to determine the continuation of the enterprise, especially when they are solely dependent on the enterprise for the supply of goods.
    • Public: Public is interested in understanding the enterprise’s substantial contribution in terms of employment opportunity and their patronage to local suppliers.

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