Fundamentals of Accountancy,

Business and Management

III. Users of Accounting Information
Users of Accounting Information
 “Accounting information helps users to make
better financial decisions”.
Users of Accounting Information
 Who uses accounting data or information?

◦ Internal Users ◦ External Users

 Such as:  Such as:
 Management  Creditors
 Employees  Customers
 Owners  Investors
 Tax Authorities
 Regulatory Authorities
Users of Accounting Information
 Internal Users (Primary)
◦ are those individuals inside a company who plan,
organize, and run the business. These users are
directly involved in managing and operating the
business.
Users of Accounting Information
 Internal Users (Primary)
User Information Needed Decision Supported
Management - income/earnings for - analyze the organization's
the period performance
- sales - take appropriate measures
- available cash to improve the company
- production cost, etc., results
- pricing decisions
Employees - profit for the period - job security
- salaries paid to - stay in employment
employees - look for a new job
Owners - profit or income for - considerations regarding
the period additional investment
- resources or assets of - expanding the business
the business - borrowing funds to support
Users of Accounting Information
 External Users (Secondary)
◦ are individuals and organizations outside a
company who want financial information about
the company. These users are not directly
involved in managing and operating the business.
 Users of Accounting Information
 External Users (Secondary)
User To be use for
Creditors - determining the credit worthiness of an organization. Terms
- Banks of credit are set by creditors according to the assessment of
- Lenders their customers' financial health.
- Suppliers
Customers/ - assessing the financial position of its suppliers which is
Clients necessary for them to maintain a stable source of supply in
the long term.
Investors - analyzing the feasibility of investing in a company. Investors
want to make sure they can earn a reasonable return on
their investment before they commit any financial resources
to a company.
Government - determining the credibility of the tax returns filed on behalf
Agency of a company
Users of Accounting Information
 Activity
QUIZ
 Evaluation:

 1. Differentiate internal users from external

users of accounting information.
 2. Complete the table below:

User Category Useful in?

Production
Manager
Utility Worker
BIR
Supplier