Who are the users of accounting …

Users may be categorised into internal users and external users.

(A) Internal Users

• Owners: Owners contribute capital in the business and thus they are exposed to maximum risk. So, they are always interested in the safety of their capital.
• Management: Accounting information is used by management for taking various decisions.
• Employees: Employees are interested in the financial statements to assess the ability of the business to pay higher wages and bonus.

(B) External Users

• Banks and financial institutions: Banks and Financial Institutions provide loans to business. So, they are interested in financial information to ensure the safety and recovery of the loan.
• Investors: Investors are interested to know the earning capacity of business and safety of the investment.
• Creditors: Creditors provide the goods on credit. So they need accounting information to ascertain the financial soundness of the firm.
• Government: The government needs accounting information to assess the tax liability of the business entity.
• Researchers: Researchers use accounting information in their research work.
• Consumers: They require accounting information for establishing good accounting control, which will reduce the cost of production.