Accounting information relates to the activities of an individual or to a business enterprise. Its various users can be places in two categories:
ِA – Those inside the enterprise. The managers or in the case of small business the owner or the proprietor.
B – Those outside the enterprise. Banks, the government, tax authorities etc.
1 – Internal users:Accounting information is used internally by some users. But the major internal user is the management of a business.
Management's needs information to plan activities so that the finance can be raised, marketing and promotional campaigns can be set up and production plans can be made.
Also management needs information to control the activities of the enterprise that may include setting sales targets. Ensuring that there are enough goods in stores etc.
Finally management's needs information to make specific decisions such as: should the enterprise produce a specific item or buy it? How much will it cost to produce a specific item? How much money will the business need in order to run its activities?
2 – External users:Financial accounting can be thought of as that part of the accounting system which endeavors to meet the needs of the various external user groups
A – Owners In case of small business the owners are likely involved in the day-to-day operations of the business. The owners' needs to know whether the enterprise has done as well as it should have done, whether the managers have looked after. And made a good use of the resources of the enterprise and how the enterprise is going to fare in the future.
B – Lenders:Lenders are the persons who have extended credit to the enterprise. They are interested in seeing that an enterprise is achieving sufficient profit to provide them with their return. They are also concerned to ensure that the enterprise will be able to repay the money it has borrowed.
C – Suppliers of goods and services:The suppliers will be interested to know whether the firm is likely to stay in business and whether it is probably to expand or contact. Suppliers of goods who have not been paid immediately will also be concerned with assessing the likelihood of getting paid.
D – Customers:Customers are the target to whom the enterprise is planning to market its goods or services. Customers would like to assess an enterprise ability to survive and in turn to carry on supplying them with goods and services. The customers will need to see that the enterprise is profitable.
E – Employees:They depend on the survival of the enterprise for their wages or salaries and therefore are interested in whether the enterprise is likely to survive. The employee may also be interested in comparing how well the enterprise is doing. Compared with other similar enterprises for the purpose of wages negotiations.
F – Government The government uses the accounting information for number of purposes and the clearest purpose is imposing of taxes. The government also uses accounting information to produce industry statistics for the purpose of regulations.
G – The general public:The general public may require many types of information regarding enterprise in both the public and private sectors. They could be interested in the level of pollution resulting from a particular industry. They also interested in these information with which he come in contact in daily life such as banks and public utilities.
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