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Title: Users of Accounting Information
Description: Understanding of the external and internal users of financial information.
Description: Understanding of the external and internal users of financial information.
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FUNDAMENTALS OF ABM1 | Users of Accounting Information
Philippine Normal University(PNU)
Understanding of the external and internal users of financial information
...
INTERNAL USERS
Internal users of accounting information are those individuals inside a company who
plan, organize, and run the business
...
These include marketing managers, production supervisors,
finance directors, company officers and owners
Internal users (Primary Users) of accounting information include the following:
Management
Information need: income/earnings for the period, sales, available cash, production cost
Decisions supported: analyze the organization's performance and position and take
appropriate measures to improve the company results
...
Employees
Information need: profit for the period, salaries paid to employees
Decisions supported: job security, consider staying in the employ of the company or
look for other employment opportunities
...
Accounting information is presented to internal users usually in the form of
management accounts, budgets, forecasts and financial
statements
...
EXTERNAL USERS
External users are individuals and organizations outside a company who want financial
information about the company
...
The two most common types of external users are potential
investors and creditors
...
Creditors (such as suppliers and bankers) use
accounting information to evaluate the risks of granting credit or lending money
...
External users (Secondary Users) of accounting information include the following:
Creditors: for determining the credit worthiness of an organization
...
Creditors include suppliers as well as lenders of finance such as banks
...
Investors: for analyzing the feasibility of investing in a company
...
Customers: for assessing the financial position of its suppliers which is necessary for
them to maintain a stable source of supply in the long term
...
SUMMARY OF THE DIFFERENCES BETWEEN INTERNAL AND EXTERNAL USERS
Internal users of accounting information are those who are involved in planning,
organizing and running the business
...
Examples of these internal users are managers,
employees and owners
...
Examples of these
external users are potential investors, suppliers and government agencies
Title: Users of Accounting Information
Description: Understanding of the external and internal users of financial information.
Description: Understanding of the external and internal users of financial information.