Who are the users of accounting information ? Why do they need accounting information? [Grade 11]
Answers
Example of internal users are owners, managers and employees . External users are people outside the bussiness entity (organization) who use accounting information . Examples of external users are suppliers , banks , customers , investor, potential investor, and tax authorities.
Internal users :-
♥ Owners - They contribute capital in the business and are exposed to maximum risk .
♥ Management - They make decisions such as determination of selling price , cost , etc...
♥ Employees - They are entitled to bonus at the end of the year which is dependant on the profit earned by the enterprise .
External users :-
♥ Banks - Provide loans to business by watching their performance . They assess it by analysing the accounting information .
♥ Creditors - Supply goods and services on credit . Before granting it , they analyse the credit worthiness of business .
♥ Researches - They use it in their research work .