Question

Who are the users of accounting information ? Why do they need accounting information? [Grade 11]

Answer 1

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.

Answer 2

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 .