Business Accounting

In: Business and Management

Submitted By slackerx
Words 268
Pages 2
Accounting information is significant for internal and external users.
Internal users
Internal users consist of management, employees, owners and etc.
Accounting information is important for management for evaluating the organization's performance and position and taking proper measures to improve the company results.
Accounting information is need for assessing organisation's profitability and whether it will have any effect on their future remuneration and job security.
Lastly accounting information is needed for the owner for analysing the feasibility and profitability of their investment and determining any future course of action.

Accounting information is presented to internal users usually in the form of management accounts, budgets, forecasts and financial statements.

External users
External users include creditor, tax authorities, investors, etc.
It is used for determining the credit worthiness of the organization. Terms of credit are set according to the assessment of their clients' financial health. Creditors include suppliers as well as lenders of finance such as banks.

Tax Authorities
Accounting information is for determining the credibility of the tax returns filed on behalf of the company.
Accounting information is used by analysing the probability of investing in the company. Investors want to make sure they can earn a reasonable profit on their investment before they commit any financial resources to the company.

External users are communicated accounting information usually in the form of financial statements. The purpose of financial statements is to cater for the needs of such various users of accounting information in order to help them in making sound financial decisions.

Reference list


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