Virtual Kollage: Those who use accounting information

Posted by / Saturday, 30 April 2016 / No comments

Those who use accounting information




USERS OF ACCOUNTING INFORMATION

These are the group of people who are interested in the accounting information of a business.
The users of accounting information are also called interest groups, interest holders or stakeholders. They are under- listed:

Owners or shareholders
They are the owners of the business who provide the risk or equity (owners) capital of a company. They want information about the profitability of the business, share prices and dividend payable.

Management
They are responsible for the day-to-day activities of the company. They need information about current and future situation of the business to ensure effective and efficient decisions.

Lenders
These are the providers of loan capital to the business. They need information about the liquidity of business that shows the ability of the business to pay interest and the repayment of the principal when due.

Employees
This refers to the labour force found in every business organization. They work for a reward called wages and salaries. Their interest in a business organization is to know the type and kinds of bonuses and other incentives available to them. They are much more concerned with salary structure of organizations. They are also interested in growth and profitability.

Customers
This group of interest holders patronize (purchase) goods and services produced by business organizations. In other words, they are those that goods produced by businesses are sold to, most of the time, on credit. They need information such as trade and cash discounts available, delivery periods, payments terms and other trading conditions.

Suppliers and other trade creditors
This group of users sells goods or renders services to business organizations. That is to say business organizations buy from these group of people, most of the time on credit. They therefore need information that will help them to determine the ability of firms or business organizations to pay back their debts as and when they fall due.

Financial analysts
They need accounting information to be able to measure the financial strength and weakness of business organizations.


Government and their agencies
They are interested in assessing the tax payment abilities of business organizations. They for that matter investigate whether businesses have actually fulfilled their right tax obligations.

The public or students
These people sometimes need accounting information for their research works. The public may be interested in knowing their social obligation of businesses towards the society.

Banks and other financial institutions
These are the providers of loan capital to the business. They need information on the liquidity of businesses that show the ability of the business to pay interests and the repayments of the principal when due.

SAMPLE QUESTIONS
1. a. What is financial accounting?
    b. Highlight five categories of people who use financial information.

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