CH2: USERS OF ACCOUNTING INFORMATION

internal users and external users

Users of accounting information

Management, Employees, Owners/Stockholders

Internal users of accounting information

Customers, Creditors, Potential, Investors, Government, Academe, Public

External users of accounting information

Accounting Information

produced and presented based on the needs of users

Internal Users

Responsible for budgeting, forecasting, monitoring of investments and returns and assess the sustainability and security of their remunerations

External Users

Responsible for investments, lending, tax and penalty, transactions, and consumer decisions

Customers

Main source of income of businesses; acquire goods and services for a fee

Creditors

Providers of additional funds when the initial investment of owners is exhausted; lend resources to businesses usually in the form of money

Potential Investors

Providers of additional funds when the initial investment of owners is exhausted; invest resources in the business hoping to earn decent returns

Government

An external user whose primary role is to regulate businesses; studies financial statements to determine amount of taxes payable

Academe

Uses accounting information primarily for academic purposes

General Public

Citizens and residents of the country even though they do not plan to transact with the business; use financial statements to gauge the

condition of the economy

Management

Employees that can make decisions for the company; considered the brain of the company

Employees

Persons in the company aside from managers and owners or stockholders; do not have authority to implement decisions

Owners or Stockholders

Existing investors of the company; concerned mostly with the profits of the company

Customers

Patrons, clients, people acquiring goods or services of a company for a fee

Creditors

Banks, lending institutions, wealthy individuals; sometimes the government can also lend resources to a company

Potential Investors

Wealthy individuals, other businesses planning to invest

Government

Different government agencies, taxing authorities, government officials

Academe

Professors, lecturers, students, and researchers

General Public

Common people not connected with the company

Management

Board of directors, top management, middle-level managers, supervisors

Employees

Laborers, field workers, non-managerial employees

Owners or Stockholders

Founders of the company, owners, stockholders, partners, proprietors