Users and Uses of Accounting Information
Users of accounting information
The users of accounting information can be classified into a number of categories or groups. Each group has different types of economic decisions to make and, as such, each group has different information needs. The principal users of accounting information include the following:
Owners and investors
Management
Banks and other lenders
Suppliers
Customers
Employees
Competitors
The government
The general public
Information needs of various users
Owners and Investors
The owner of a business is faced with a number of economic decisions. These might include:
deciding whether to keep the business, sell it or close it down completely,
deciding whether to invest more money in the business, and,
deciding how much money can safely be withdrawn from the business without damaging its financial stability.
Similarly, people who do not own a business outright but who have invested their money in one (e.g. the shareholders of a limited company) must decide whether to maintain, increase or reduce the size of their investment. Owners and investors who have delegated the day-to-day running of the business to managers acting on their behalf will also need to decide whether or not the managers should remain in office. This decision will usually depend upon how well the business has performed under the stewardship of the manager(s) concerned. When making all of these decisions, owners and investors will probably find the following information useful:
information about the recent financial performance of the business, showing how well or badly the business has done.
information about the current financial position of the business, showing