Users Of Accounting and Information
The main objective of accounting and information is keeping an organized record of financial
transactions related to the business organization by which they understand the day-to-day
transactions in a well-ordered manner to get information on the overall business. Several types of
users learn information regarding the business organization following:
1. Shareholders of the Company: The shareholders or stockholders are the owners of a
company who own common stocks in that company. This type of ownership allows the owners
to reap the benefits of the business’s successfully achieved goals. These benefits are dividends or
an increase in stock valuation.
Financial statements provide a summary of a company’s financial situation of a particular
financial period, the company’s performance, operations, cash flows, and overall conditions.
Stockholders need these financial statements to make decisions on their investments. For better
decisions, it is necessary to analyze their shares using various measurements.
2. Managers: A manager plays a role with responsibilities and leads a team of employees in a
firm. He is responsible for managing a specific department under his leadership in the company.
Accounting information is a need in which quick decisions are needed for managerial purposes.
Managerial accounting is needed by managers to plan, evaluate the performance and the risks,
and set a realistic budget.
3. Employees: Employees are the people who make products or provide services for buyers or
customers of the company. They work under the managers and work according to their
instructions and guidelines.
Employees have an impact on the outcome of the company. The reasons why employees of a
business organization need accounting information are to evaluate the financial position of the
company and determine their job safety, future remuneration, retirement benefits, and
employment opportunities.
4. Creditors: Creditors include banks, financial institutes, and other lending organizations who
provide finance as a loan for business organizations.
Creditors are interested in accounting information because they need to know the
creditworthiness of the company. They need to know whether the company’s credit terms and
standards are set up based on the financial condition of the business.
5. Investors: Investors invest their money in business organizations for a reward in form of
expected return. Investors need accounting information regarding their investments because they
need to assess the risk related to the investments they provide to the organizations, as well as the
return on the investment.
6. Government: Government agencies like registrar of companies, law boards, and tax
authorities need accounting data to assess companies following rules and regulations to conduct
business activities and operations and, as a basis for tax assessment, they need accounting data
7. Customers: Customers are people who buy products or services from a company. They need
to know or learn about the solvency of the company. To evaluate the ability of the firms to
continue supplying their need in the future, customers analyze the accounting information of that
company so that they can assess the firm’s financial health.