Accountancy
is a language of a business which explains the results and financial position
of business. There are many users to know the status of businesses. Accountancy
is a useful communicative medium to the users to know the results and financial
position of a business. Users are classified into internal users and external
users. Accountancy provides necessary information that is required by the users
Internal Users
Some individuals and groups are inside
organization. They are called as internal users. They are 1) owners 2)
Management 3) Employees.
Owner
The
proprietor of business requires the information of accountancy to know the
profitability status of business. Accountancy provides the required information
in forms of financial statements, financial reports, and statement of accounts
to the owners.
Management
Management requires the information of
accountancy to assist in decision – making, planning, controlling, etc.
Management can discharge its activities more effectively, when they get the
appropriate information of accountancy.
Employees
Employees
are appointed in an organization are interested of knowing the information of
accountancy. They can assess the financial position that may or may not be
enough to pay their remuneration and retirement benefits.
External Users
Some
users are not inside the organization. They just relate to business in some
way. They are called as external users. They are 1) Creditors, Banks, and
lenders 2) Customers 3) Potential Investors 4) Present Investors 5) Tax
Authorities and government 6) Public.
1) Creditors, banks, and lenders
Creditors,
banks, and lenders provide credit to a business. They always want to know the financial strength of the business.
They asses that the business can repay the debt or cannot repay the debts. They
check the liquidity status of the business. If the liquidity position is
strong, they rely that their debt is to be repaid otherwise they inquire the
business about the repayment of their debt.
2) Customers
.Customers regularly buys goods of the
business. If the profitable position and financial position of the business is
good, the goods which are produced that will be good in condition. Therefore
they require the information of accountancy to assess the status of business.
3) Potential Investors
Potential investors are the investors who
are having the interest of investing in the business. They want to know the
financial position or result of the business before investing in the business.
They are provided with the information of accountancy by the business.
4) Present Investors
Present
investors are the investors who have already invested his money in business.
They want to sell or buy their securities in the market. As they want to sell
or buy their securities, they are required to know the financial position or
results of the business. They are provided with the information of accountancy
by the business to assess the financial position or results of business. Such
information of accountancy are provided in form of various reports and
statements.
5) Tax Authorities and Government
To
assess the income of business, tax authorities require the accounts and statements
of accountancy. Various information are provided in forms of statements and
accounts to the tax authorities. Tax authorities want accounts and statements
because they levy tax on incomes that are revealed by accounts and statements
6) Public
Business
affects the general business in many ways. They contribute to the economy of a
region of public. It provides employment and its support to local sellers,
buyers and market. Therefore general public are interested to know the
information of accountancy of the business.
Comments