Question

Describe the users of accounting information.

Answer 1

The various users of accounting information are as follows:

1. Managers: They use accounting information to evaluate business performance and to frame proper plans and decisions.
2. Owners: They are concerned with knowing the profit or loss of the business and the changes in the value of their investment.
3. Investors: They need accounting data to decide whether to invest in a business or not.
4. Lenders: Creditors depend on accounting information to check the security of their loans and to ensure the business has enough funds to repay interest and the principal amount.
5. Government: Tax authorities use accounting details to determine the tax liability of a business. In addition, trade unions and researchers also make use of accounting information.