Question

state any aix uses of accountancy information . Why do their need of accounting information

Answer 1

Internal users or Primary users of accounting information include:

Management- Accounting information is of great assistance to management for planning, controlling and decision making process. Also, management needs the accounting information to evaluate the performance of the organization and position, so that the necessary measures may be taken to bring improvements in terms of business results. Besides, accounting information is useful to help mangers to do their jobs better.
Employees - Employees use the accounting information to find out the financial health, amount of sales and profitability of business to determine their job security, the possibility of future remuneration, retirement benefits and employment opportunities.
Owners – Owners use the accounting information for analyzing the viability and profitability of their investments. Accounting information enables the owners to assess the ability of the business organization to pay dividends. It also leads them to determine any future course of action.

External users or Secondary users of accounting information include:

Creditors – Creditors are interested in accounting information, because it enables them to determine the credit worthiness of the business. The credit terms and standards are set on the basis of the financial health of a business, so, it helps them to analyze by using the accurate information accordingly. Creditors include suppliers and lenders of finance, such as banks. Trade creditor are generally interested in the accounting information for a short period of time than lenders.
Investors – They need the information, because they are concerned with the risk inherent in investing and the returns. Since it is important to assess the feasibility of making investments in the company, they need to analyze before they provide any financial resources to the company.
Customers – Customers have interest in the accounting information for assessing the financial position of a business, especially, when they have a long term involvement with, as it enables to maintain a steady source of business.
Regulatory Authorities – The accounting information is needed for them to ensure that it is in accordance with the rules and regulations and that it protects the interests of the stake holders who rely on such information.