Users of Accounting Information

Accountancy is the process of communicating financial information about a business entity to users such as shareholders and managers (Elliot, Barry & Elliot, Jamie: Financial accounting and reporting)

Accounting has been defined as:-the art of recording, classifying, and summarizing in a significant manner and in terms of money transactions and events which are, in part at least, of financial character, and interpreting the results there of.(AICPA)

Users of Accounting Information - Internal & External:-Accounting information helps users to make better financial decisions. Users of financial information may

be both internal and external to the organization

Users of Accounting Information - Internal

Management: Employees Owners

Users of Accounting Information

ExternalCreditors

Tax Authourities

InvestorsCustomers

Regulatory Authorities

Internal users (Primary Users)

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

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

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

External users (Secondary Users)

I. 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 banksII. Tax Authourities: for determining the credibility of the tax returns

filed on behalf of the companyIII. 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

External users (Secondary Users)I. 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. II. 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 decision

BRANCHES OF ACCOUNTING

FINACIAL

ACCOUNTING

ACCOUNTING MANAGEMENT

ACCOUNTING

EMPLOYEES EMPLOYEES:- employees are entitled to bonus at the end of the year which is

linked to the profit earned by an enter price there for the employees are interested in finance statement these the finance statement also reflect whether the enter price

employees will there fore look for information Revenue and profit growth

Levels of investment in the business Status and valuation of company pension levels of

company pension contributions

OwnersOwners contribute capital in the business and are exposed to maximum risk thus they are interested in knowing the profit or loss by the business besides statements give the information the finance profit or loss end finance pension of the business

The key accounting information the fore

1.Loss flow 2.Security of asset against which

the lending my be secured 3.Investment requirements in

the business

Investors Investors are concerned about risk and return in relation their investment they require information to decide whether the continue to invest in the business they also and measure the performance of the business management over all creditors will there fore be looking for information on a) Cash flow b) Management of working capital c) Payment by policy

Power point presentation By:-(PPT)

DHARMENDRA KUMAR

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