Users of Accounting Information

Accounting provides useful information relating to business. Such information is used directly or indirectly by the following interested parties.

Owners:

The owners are interested to know the operational results of the business (profit or loss) and also to know the financial status of the business, because they are ultimate risk takers.

Creditors:

Creditors are the persons who owe money to the business. Both short term and long term creditors need information. Short term creditors need the information to determine whether the amount owing to them will be paid when falls due. Long term creditors are interested in both solvency and liquidity of the business. They are interested to determine whether the enterprise will be in a position to meet its commitment both payment of interest and principal on time.

Investors:

Both present and potential investors need the information to judge the prospects of present and potential investment in the business. Present investors need the information to decide whether they should continue in the present investment or not. Prospective investors need the information to decide whether to invest in the business or not.

Employees:

The interest of the employees in accounting information is related to that they want more salary and other monetary incentives like, bonus, overtime payment etc. They are interested in financial statements on account of various profit sharing and bonus schemes under which they get a share in the profits of the business.

Government:

Government is interest in account statements and reports in order to see the performance of a particular enterprise, its cost structure and income in order to impose income tax, excise duty, commercial taxes etc., The business firms have to pay a part of profit to the Government as tax.

Public:

The Public as consumers is interested in accounting statements in order to know whether the control is exercised on controlling the expenses of the business and the price fixed is reasonable. They can also judge whether the economic resources of the country are being utilized for the benefit of common man or not.

Researchers:

Researchers are interested in accounting statements and reports in order to get data for proving their thesis on which they are working and hence to complete their research project and draw conclusions which may help in formulating future policies in their respect areas.

Management:

The management of an enterprise needs accounting information for planning controlling, evaluation of performance and decision making.