Who is the user of accounting information?

The users of accounting information are divided into two categories:-

1) internal users

2) External users

1. INTERNAL USERS

These are the management and employees' of the organisation.

- Management/managers need accounting information to assist them in making different decision concerning the business. eg. changing the product line, increasing production or sales of a certain product, expanding its operation or reducing its coverage etc.

- Employees need accounting information in order to know their productivity, whether their earnings will be increased in the future, whether the business is able to pay their wages/salaries etc.

2. External Users

These are the users apart from those within the organisation who need accounting information so as to make their own decision in relation to the bosiness/organisation. example of those external users are customer, suppliers, bankers of the business, competitors, tax authorities, investors, the government etc.

Some the external users and their information needs are:-

- Customers need information such as whether the business will continue to lender them services or not, and the ability of the business to meet their orders at the specified time.

- supplier need accounting information so as to know whether the business will be able to pay their debts for the goods or services sold or lendered to it , and the time the business will take to pay its debt.

- Investors need the accounting information so as to decide whether they should invest with the business, whether withdrowing their investments and or increase their investment in the business.

- tax authorities need accounting information so as to predict/calculate how much will be received from the business as tax, or to increase or decrease tax payable by the business.