How various parties are benefited from accounting information?
There are two types of accounting information users both inside and outside of an organization. They are called (1) Internal & (2) External users.
1) Internal users or Primary users: These users are directly connected with the organizations & runs it. Like managers, employees & owners. They uses AI for different reasons.
a) Management: For analyzing the organization’s performance, position and taking appropriate measures to improve the company’s overall growth.
b) Employees: For assessing company’s profitability and its consequence on their future remuneration; sometimes- job security.
c) Owners: For analyzing the viability and profitability of their investment and determining any future course of action. Such as more investments.
2) External users or secondary users: These users indirectly affects organization’s decisions & profit margins.
a) Creditors: For determining the creditworthiness of the organization. As, terms of credit are set by the creditors according to the assessment to their customer’s financial health. Creditors include suppliers as well as lenders of finance such as banks.
b) Tax authorities: For determining the credibility of the tax returns filed on behalf of the company.
c) 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.
d) Suppliers: For assessing the financial position which is necessary for supply to maintain a stable source of supply in the long term.
e) 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.
Contributor: Mustari Rahman Ritu
From Mawlana Bhashani Science & Technology University