Accounting books gives us vital information about the company and in this post you will learn who make use of what information from a accounting book. The users are categorized in two types External and Internal. External users include Investors, Creditors, Customers, Suppliers, Employees, and Government organizations. Whereas Internal users includes Management and Managers of operations.
An Investor provide capital to business. They need information to assess whether to buy, hold or sell their investment/shares. Also they are interested to know the ability of the business to survive, prosper and to pay divided.
Growth of employees is directly related to the growth of the organisation and therefore, they are interest to know the stability, continuity and growth of the enterprise and its ability to provide remuneration, retirement and other benefits and to enhance employment opportunities.
Lenders are interested to know whether their loan principal and interest will be paid when due.
Supplier and Creditors
They are also interested to know the ability of the enterprise to pay their dues that helps them to decide the credit policy for the relevant concern, rates to be charged and so on. Sometime, they also become interested in long term continuation of the enterprise if their existence becomes dependent on the survival of the business. Suppose, small ancillary units supply their products to a big enterprise, if the big enterprise collapses, the fate of the small units also becomes sealed.
Customers are also concerned with the stability and profitability of the enterprise because their functioning is more or less dependent on the supply of goods. Suppose, a company produces some chemicals used by pharmaceutical companies and supplies chemicals on three months credit. If all a sudden it faces some trouble and is unable to supply the chemical, the customers will also be in trouble.
Government and their agencies
They regulate the functioning of business enterprise for public good, allocated scarce resources among competing enterprise, control price, change excise duties and taxes, and so they have continued interest in the business enterprise.
The public at large is interested in the functioning of the enterprise because it may make a substantial contribution to the local economy in many ways including the number of people employed and their patronage to local suppliers.
On the basis of Accounts, management determine the effects of their various decisions on the functioning of the organisation. This helps them to make further managerial decisions.
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