Users of Accounting Information - SS1 Accounting Lesson Note
Accounting information is important for making informed decisions about a company's financial activities, and is used by a wide range of groups who have an interest in the company's success. Some of the primary users of accounting information include:
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Shareholders/Investors: Investors use accounting information to evaluate a company's financial performance and determine whether to buy, hold or sell their shares in the company. They also use this information to make decisions about investing in new companies.
Management: Managers use accounting information to make informed decisions about the company's operations, such as planning budgets, setting financial goals, and determining the profitability of different products or services.
Creditors: Creditors, such as banks or other lending institutions, use accounting information to evaluate a company's ability to repay loans and to assess the level of risk associated with lending to the company.
Government and regulatory agencies: Government and regulatory agencies use accounting information to monitor and regulate companies' compliance with tax laws and other regulations.
Financial Institutions: The banks and non-bank institutions require accounting information in order to ascertain the creditworthiness of individuals and firms looking to borrow funds by revealing the true business and profitability position of such prospective borrowers
Stock Brokers: Stock brokers use relevant information to be able to properly advise and guide their clients on the best time periods to participate in the stock market.
Tax Agents: The body of tax Agents use accounting information to calculate the amount of payable tax out of a firm's profit.
Employees: Employees use accounting information to understand the financial health of the company and to evaluate the company's ability to provide job security, pay raises, and other benefits.