Riaz Academy
Possible Internal or External users of accounting information include:
- Managers: These are the day-to-day decision-makers. They need to know how well things are progressing financially and about the financial status of the business.
- Owner(s) of the business: They want to know what the financial resources of the business are.
- A prospective buyer: When the owner wants to sell a business the buyer will want to see such information.
- The Bank: If the owner wants to borrow money for use in the business, then the bank will need such information.
- Tax Inspector: They need it to be able to calculate the taxes payable.
- A prospective partner: If the owner want to share ownership with someone else, then he would be provide information to prospective partner.
- Investor: Every investor either existing one or potential one. They want to know whether or not to invest their money in the business.
There are many other users of accounting information, such as Suppliers, Employees, Competitors etc. One obvious fact is that without properly recorded accounting data a business would have many difficulties providing the information to these various users (often referred to as “Stakeholders“).
However, the information produced by accounting needs to be a compromise – so many different groups of stakeholders make it possible to produce accounting information at a reasonable cost in a form that suits them all.