Users of accounting information and accounting bases

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.