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Users of Accounting Information
75
Internal
&
External
Users of Accounting Information
Government
Potential investors
Academe
Providers of additional funds.
Decisions to made:
- Whether or not to invest in the business, primary concern is the ability of the business to provide acceptable returns.
Creditors
An external user whose primary role is to regulate business
Decisions made:
- Oversees business operations with the end goal of improving the economy
- Checks the accuracy of the financial statements to compute for the correct amount of taxes payable
Uses accounting information primarily for academic purposes
Decisions made:
- Uses accounting information in the teaching of accountancy
- Researches loopholes and possible improvements in the field of accountancy
Providers of additional funds when the initial investment of owners is exhausted; lend resources to business usually in the form of money.
Decisions made:
- Whether or not to lend resources to the business, try to see if the business is not very risky before lending fiunds.
General Public
Customers
Main source of income of business.
Decisions to be made:
- Whether or not to build relationship with the business to have any dealings with the business.
Citizens and residents of the country that may or may not plan to transact with the business.
Decisions made:
- whether or not it is wise to start a business given the current economic conditions
- to stay on current job or look for a higher-paying job
- determine the optimal levelof savings and consumption
Learning Objectives:
At the end of the lesson, the learners should be able to:
- define external users and gives examples
- define internal users and give examples
- identify the type of decisions made by each group of users
- describe the type of information needed by each group of users
Management
Employees
Owners or Stockholders
Employees that can make decisions for the company.
Decisions made:
- Making business decisions
- Allows management identify problems immediately and to respond accordingly
Persons in the company aside from managers and owners; do not have authority to implement decisions
Decisions made:
- Check if business is profitable enough to provide compensation and other benefits
Existing investors of the company
Decisions made:
- Mainly concerned with the returns earned from their investment
- Owners taking active roles in the operations of the business also make decisions.