Presentation on Basic Accounting

Submitted To : Mr. Abu Ahmed Course Teacher Principles of Accounting

By : Himangshu Deb Roy ID#0605893 EMBA 10th Batch

USERS OF ACCOUNTING INFORMATION

The aim of all accounting information is to provide the particular user with relevant and timely data to make decisions. Possible users include: shareholders; owner-managers; management; suppliers; customers; employees; government; competitors; lenders.

Shareholders
Shareholders of limited companies will be influenced in their decision to remain investors or to increase/decrease their holding by receiving information about the financial performance and financial position of their company. This usually occurs twice a year in the form of a profit and loss account and a balance sheet relating to the first halfyear and, later on, the full year.

Owner-Manager
Owner-managers of non-incorporated businesses will require the above information but they will also be privy to more detailed and more frequent information about the businesss financial affairs. 4 The annual accounts

Management
Management in companies range from director level down to supervisor level. Each person requires accounting information to help them in their role. Supervisors may be concerned with operating costs for a very small part of the undertaking. Directors need to control the overall performance of the company and make strategic financing and investment decisions. Middle management need feedback on whether they are meeting their financial targets.

Suppliers
Suppliers need to assess the creditworthiness of potential and existing customers when setting the amount and period of credit allowed. This will partly, if not mainly, be based on the financial history of each customer so the suppliers accountants will assess the latest profit and loss account and balance sheet. Other data on payment history may be obtained from credit agencies, for example, Dun & Bradstreet, to assist in this decision.

Customers
Customers also need to be reassured, in this case to minimize the risk of their supplies drying up and disrupting their own output. Firms entering into a joint venture will also need mutual reassurance. Similar checks to those outlined above for uppliers will need to be carried out.

Employees
Employees and their representatives have a vested interest in the financial health and future prospects of their employer. They rely on an assessment of the published accounts by experts for this

Government
Government levies tax on the profits earned by businesses and value added tax on the sales value of most industries. Tax authorities rely on the information provided by companies for these purposes.

Competitors
Competitors can make some comparisons, for example, sales per employee, from published accounting data in a process known as benchmarking. This may provide clues to areas where performance may be improved particularly if explanations of differences in operating systems can be obtained.

Lenders
Lenders need to be assured that their capital is safe and that the borrowing company can service the loan or overdraft adequately, so again the financial statements of profit and loss account and balance sheet will be examined from this viewpoint.

Conclusion
It can be concluded from the above that most users of accounting information are drawing on that provided in the published accounts. Only management have access to more detailed, non-published financial information within a company.