Question

In: Accounting

What information do users of accounting reports need?

What information do users of accounting reports need?

Solutions

Expert Solution

USERS OF ACCOUNTING INFORMATION IS MAINLY TWO TYPES ONE IS INTERNAL USERS AND ANOTHER IS EXTERNAL USERS

INTERNAL USERS

1. OWNERS: THEY ARE THE DECISION MAKERS OF ORGANIZATION THE INFORMATION AND THE OUTCOME ARRIVED BY PREPARING THE FINANCIAL STATEMENTS. IT WILL ALSO HELP THEM TO CHECK AND RISK FACTOR ASSOCIATED WITH THEIR INVESTMENT IN ORGANIZATION.

2. MANAGEMENT

GIVES MANAGEMENT AN IDEA REGARDING THEIR PERFORMENCE DURING THE YEAR AND ALSO TO COMPARE THEIR PROJECTED FIGURES WITH ACTUAL FIGURES

3. EMPLOYEES: EMPLOYEES ARE PART OF THE INTERNAL USERS, AND THEY WILL HAVE THEIR OWN EXPECTATIONS BASED ON THE PERFORMENCE OF COMPANY.

EXTERNAL USERS

1. INVESTORS: INVESTORS ARE INTEREST ON THE FINANCIAL STATEMENTS IN ORDER TO MAKE DECISION REGARDING WHETHER TO INVEST IN COMPANY OR NOT AND ALSO THE RISK FACTOR ASSOCIATED WITH THE COMPANY.

2. SUPPLIERS: SUPPLIERS ARE THE CREDITOR OF THE ORGANIZATION WHO ALWAYS HAVE INTEREST IN THE FINANCE POSITION OF COMPANY IN ORDER TO MINIMIZE THEIR BAD DEBTS ISSUES. ON THE BASIS OF FINANCIAL DATA AND POSITION THEY WILL TAKE DECISION REGARDING WHETHER TO CONTINUE THE RELATION OR NOT WITH THE PARTY.

3. GOVERNMENT : GOVERNMENT IS ALWAYS HAVE THEIR CONTROL ON THE AREAS WHERE PUBLIC INTEREST IS SITUATED. GENERALLY COMPANY WITH PUBLIC FUND WILL BE MONITARIZED TIME TO TIME IN ORDER TO CONTROL ON THE MANAGEMENT.

4. LENDORS : LENDORS ARE PERSONS WHO CONTRIBUTE TO THE ORGANIZATION FINANCIAL SUPPORT, WHO HAVE MORE RISK WHEN THE COMPANY WENT IN TO LOSSES .THEY WILL PREPARE OR RECOVER THEIR DEBTS BASED ON FINANCIAL STATEMENTS AND ALSO PROVIDE EXTRA BENEFITS OR CREDIT FACILITY BASED ON POSITIVE REPORTS.


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