Users of accounting information and accounting bases
HomeAll Users of accounting information and accounting bases
Use, by you or one client, in a single end product which end users are not charged for. The total price includes the item price and a buyer fee.
The various users of accounting information are classified as internal users and external users. Internal users refer to people who are within the organization and getting benefitted by the accounting information and includes owners, managers and employees. External users refer to people who are outside the organization and getting benefitted by the company’s accounting information and includes investors, creditors, suppliers, government, auditors and public. How these category of people are getting benefitted by the accounting information of the company was discussed.
Owners: Financial statements provide information to owners about the profitability of the overall business as well as individual products.
Managers need accounting information to plan, monitor and make business decisions.
Employees are interested in accounting information because their salary appraisals, bonuses, and other monetary and non-monetary benefits are attached to the company’s financial position.
Investors use accounting information to determine whether an investment is a good fit for their portfolio and whether they should hold, increase or decrease their investment.
Creditors use accounting information of the business to analyze liquidity and profitability of the company with the help of ratio analysis.
suppliers also accounting information to assess the credit-worthiness of its customers before offering goods and services on credit.
Government ensures that a company’s disclosure of accounting information is in accordance with the regulations.
The various bases of accounting is also discussed which included cash basis, accrual basis and mixed or hybrid basis. What is the condition for recording transaction under different basis of accounting is explained with an example and also the difference between the cash basis and accrual basis is also explained.
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