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INTERNAL USERS

Internal users (Primary Users) of accounting information include the following:::::::::

1 Management: for analyzing the organization's performance and position and taking appropriate measures to improve the company results.

2 Employees: for assessing company's profitability and its consequence on their future remuneration and job security.

3 Owners: for analyzing the viability and profitability of their investment and determining any future course of action.

EXTERNAL USERS

USES OF ACCOUNTING INFORMATION

1:Performance Management

A common use of accounting information is measuring the performance of various business operations.

External users (Secondary Users) of accounting information include the following::::::

Creditors: for determining the credit worthiness of the organization. Terms of credit are set by creditors according to the assessment of their customers' financial health. Creditors include suppliers as well as lenders of finance such as banks.

Tax Authourities: for determining the credibility of the tax returns filed on behalf of the company.

Customers: for assessing the financial position of its suppliers which is necessary for them to maintain a stable source of supply in the long term.

Investors: for analyzing the feasibility of investing in the company. Investors want to make sure they can earn a reasonable return on their investment before they commit any financial resources to the company.

Regulatory Authorities: for ensuring that the company's disclosure of accounting information is in accordance with the rules and regulations set in order to protect the interests of the stakeholders who rely on such information in forming their decisions.

INTRODUCTION

Introduction to Accounting

Accountancy is the process of communicating financial information about a business entity to users such as shareholders and managers

2

WHO ARE THE USERS OF ACCOUNTING INFORMATION

Create Budgets

Business owners often use accounting information to create budgets for their companies.

Investment Decisions

External business stakeholders often use accounting information to make investment decisions. Banks, lenders, venture capitalists or private investors often review a company's accounting information

THERE ARE TWO TYPES OF ACCOUNTING INFORMATION USERS: INTERNAL AND EXTERNAL USERS .........

3 Business Decisions

Accounting information is commonly used to make business decisions. Decisions may include expanding current operations, using different economic resources, purchasing new equipment or facilities

ACCOUNTING INFORMATION USERS AND THEIR INFORMATION NEEDS

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