ess styeley (eel tc Internal Internal Users u eens rae are the users who have access to significant information at the micro level from the accounting cor: s useful for decision-making. Following are the internal users and their needs for accounting information. 1. Owners Owners ‘are the persons who contribute capital in the business and bear maximum risk and get maximum reward, Since owners have invested capital in the business, they need information adcut how much profit is earned or safety of theit money invested in form of capital © Owners also need such information to decide whether they should invest more capital in the business or ‘withdraw their invested capital from the business. 2, Management Management comprise of persons who are involved in making strategy decisions as wellas running day-to-day operations + Management needs accounting information to fm decisions such as determination of selling price and strategies such as how to control costs, etc. Management needs accounting information to compare the performance of the enterprise with other similar enterprises in the industry. Management needs accounting information to take important decisions to plan future of the enterprise, ie, n, eduction in size, etc. External users are the users who do not have access to it External Users information at the micro level but have information from the financial statements (final accounts) that gives information relevant to them, Following are the types ‘of external users and their needs for accounting information. Employees and Workers | They are people who work for an | enterprise and are paid wages, salaries, bonus, etc. s remuneration. @ Usually, employees are entitled to bonus and increment at the year and. Such bonus and increment is generally based on performance of the enterprise. Hence, employees use accounting information toknow and plan about their remuneration and future prospects. e Accounting information also shows whether the enterprise has complied with the regulations of | depositing dues towards Provident © Fund, Employee State Insurance. ete. 2. Banks and Financial Institutions Banks and financial institutions are the organisations which provide loans to business enterprises. + Banks and financial institutions need accounting information to track the progress of the enterprise so that they can make the following decisions: 4 Whether to lend money to the enterprise? 4 What is the ability of the enterprise to repay the loan? + How much money to lend to the enterprise? ‘6 How safes the loan given by the Bankto the enterprise? Scanned with CamScanner 3. Potential Investors Potential investors are the people who are likely to invest in the enterprise. © Investors such as banks lend money to the enterprise, Additional funds if required, may be sought from outside parties. Before investing they look at safety of investment and returns etnvestors use the financial statements of the enterprise to assess that their investment Is secure. Potential investors use the information to decide whether they should invest in the enterprise of not.i Introduction to Accounting 7 13 4. Creditors 5. Government and Public 7. Researchers Creditors supply goods its Authorities Public in generé Researchers are the | and/or services on credit to Various Government also interested in the people and organisations, the enterprise. They assess bodies and Authorities use financial information of an _viho use accounting financial position from the accounting information to enterprise. information for research ] final accounts. arrive at various statistics ‘on various accounting 7 vhich enable policy practices, decisions. * Creditors use accounting» The Government needs © Public needs information * Researchers need information to assess financial statements of __to assess the enterprise's accounting information whether they should an enterprise to compile contribution to the to assess current supply goods/services to information regarding _economyinmanywaysjie, accounting practices, the enterprise on credit. _nationalincome,ie,total_ employment generated their improvement * Financial Statements income of the country. __bytheenterprise,amount and alignment with helpthemtounderstand This helps them in spent as Corporate Social the evolving world. what is the paying ability making policy decisions. Responsibility, etc. For example, new of the enterprise. * The Government © Publicisalsointerested in accounting standards levies various taxes on _the financial information _are framed and existing enterprises. To assess of an enterprise to be ones are modified in whether correct amount aware about the change accordance with the of taxes have been paid in its management. practical scenarios. by the enterprise, the © Public is also concerned Government Authorities whether the enterprise need the financial is performing its duties statements of the towards keeping the enterprise. environment clean or not. Scanned with CamScanner