Users of Accounting Information
The fundamental purpose of accounting is to make available information which is helpful for persons and groups inside and outside the organization.
Internal users: Internal users are those individuals or groups who are inside the organization like owners, management, employees and trade unions.
Example:
- Owners: To know the productivity and economic reliability of the business.
- Management: To take timely decisions to administer the business proficiently.
External users: External users are those individuals or groups who are exterior the organization like creditors, investors, banks and other lending institutions, present and potential investors, Government, tax authorities, regulatory agencies and researchers.
Example:
- Creditors, banks and other lending institutions: To decide whether the major and the interest thereof will be paid in when due.
- Present investors: To know the situation, development and prosperity of the business in order to make sure the safety of their investment.
- Potential investors: To fix on whether to invest in the business or not.
