Users of Accounting Information

Users of Accounting Information

Accounting information help users to make better financial decision. Users of financial information may be both internal and external to the organization.


INTERNAL USER ( Primary User ):


1) Management:    For analyzing the organization performance and position and taking appropiate measure to improve the company results.

2) Employees:       For assessing companys profitability and its consequence on their future remuneration and job security.

3) Owners:            For analyzing the viability and profitability of their investment and determining any future course of action.

Accounting information is presented to internal users usually in the form of management accounts, budgets, forecasts and financial statements.


EXTERNAL USER ( Secondary User ):


1) Creditors:    For determining the credit worthiness of the organization. Creditors include suppliers as well as lenders of finance such as banks.

2) Tax Authorities:    For determining the credibility of the tax returns filed on behalf of the company.

3) Investors:    For analyzing the feasibility of investing in the company. Investors want to make sure they can earn a reasonable return on their investment.

4) Customers:    For assessing the financial position of its suppliers which is necessary for them to maintain a stable source of supply in the long term.

5) Regulatory Authorities:    For ensuring that the companies disclosure of accounting information is in accordance, in order to protect the interest of the stake holders.

External users are communicated accounting information usually in the form of financial statements.