Who needs accounting information?
While this website primarily covers the accounting needs of a business unit, but the information made available by accounting and the manner of obtaining that information can be of considerable use for people in their personal lives as well. A large number of people have an interest in the financial well being of a business. Given below is a list of some of the users of the information provided by accounting:
People can use accounting information in the day-to-day affairs of managing their cash and bank balances, to make investments, to make such decisions as whether to buy or lease a car, to buy or rent a house, etc.
The owners and managers of businesses use accounting information to be aware of the financial health of their units, to set goals for their organizations, to evaluate their progress towards their goals, and to take corrective action where needed. Decisions based on accounting information are more likely to be correct than those based on intuition. The areas in which accounting information can help make better decisions purchase of major properties, level of inventories to be carried, how much borrowing to do, etc. Accounting information is also needed for effective control of stocks, cash and other assets.
People who are looking for business opportunities can make correct decisions only on the basis of accounting information available about the potential investment avenues. Similarly, those people (e.g shareholders) who have provided funds for a company need the accounting information prepared by the company to remain informed about the company’s state of affairs.
People who lend money to a business, whether in the form of loans or supply of goods on credit, make the credit decisions principally on the basis of accounting information available from the borrowers.
Most businesses are subject to some form of governmental control. Various government departments perform various watch dog roles to protect the interest of general public. All these departments require accounting information about the business unit to properly perform their regulatory and control functions.
Even non-profit making organizations like clubs, NGOs, welfare societies, etc. require accounting information to manage their affairs properly. In the absence of proper accounting records they would be unable to satisfy their members about the manners in which their financial affairs are being conducted.
Various trade associations collect accounting information for their members, which they summarize and circulate among the members to help them compare their performance with that of their respective industry. This helps them in their planning and management decisions. Other users of accounting information include labor unions who use accounting information to protect the interest of their members.