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Users of Accounting Information

>> December 2, 2009

External Users of Accounting Information
Investors are external users of accounting information. They are interested to know the strength of company’s financial position and profitability; both things can be known by seeing the financial statement of company. Accounting information will be helpful for them to evaluate the past performance and to check it is safe for them or not[measure also risk].

Broken Symmetry says in one of his article Why Accounting Information Should Be Reported in Real Time

It is a mathematical fact that the frequency of measurement must be at least twice the frequency of a signal for the frequency of the signal to be detected accurately. What this means is that even if all relevant accounting information is accurately reported on financial statements investors now have no way of measuring changes in the frequency of cycles within firms that occur faster than twice a year!

Every creditor gives loan or debt or goods on credit to that concern whose liquid position is strong. Creditors can know the liquid position of concern only after study the current assets and liability and these information can provide accounting. So, they become the external user of accounting information.

Government’s duty is to take tax from every type business organization . So , after checking the level of earning of businessman , they have to amend tax rates . So , Govt. needs accounting information.

Research Scholars

For researching in the field of accounting and checking the trend , it is very necessary for research scholars to use accounting information . They need accounting data like value of purchase , sale , expenses , current assets , current liabilities , fixed assets and long and current liabilities in different years

Internal Users of Accounting Information


An owner invests his fund in business and wants to earn on his investment. He needs accounting information to know he has obtained proper return on investment or not.
Management and managerial team have to take many decisions like making of future planning, organization, new staffing and controlling. All these decisions are affected companies’ product prices, company’s product cost, salary and profit margin so, they can find these details after study accounting information.

Employees have also interest in business organization because they provide their services. So they use also accounting information, if company is earning large amount of profit which is shown in financial statement, then employees can demand more salary, bonus and incentives.

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