January 29, 2022

SB-Accounting

Accounting + Finance Blog

Top five Internal Users of accounting and financial information

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By now you should know the definitions for internal and external users of accounting information. These users required financial information for a variety of needs. In this article, we will examine the top five internal users. Also, aside the definition of the user group, we will examine the concerns of the users.

Internal users of accounting information

Here are the top five internal users of financial information

Owners and shareholders: The term owners are used for small businesses that registered business name with the registrar of the company. Shareholders on its part refer to businesses registered as companies with the registrar of companies. It doesn’t matter if it is a public or private company.

The fundamental objective of every business owner and shareholder is profit. They, therefore, need accounting information to know if profit is made. In addition, the owners need to know if the business can last for a long time. Besides these, shareholders want either dividends or capital gains or both.

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Directors: Directors are agents to the company. They are expected to manage the business on behave of their principal, the shareholders. As a result, they are accountable to them. To achieve accountability, the directors ensure that the business earns a profit.

To achieve this fit, directors needs financial information to know if they meet up the tasks laid on them by shareholders. Such tasks include: profitability, growth, and development, prudently carrying out the business activities and how finances are handled.

Employees: Employees are the human resources of a firm. Without them, the business may not be able to meet its daily responsibility. However, these sets of humans are at times are difficult to deal with.

Employees want a salary regularly as well as job security. From the financial information, employees may know if the business can meet the needs mentioned above. In addition, information in the accounting system can alert staff as to if it is time to request for an increase in salary.

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Management and supervisors: These are middle and front line level managers in a full fresh company But in a small business, it is difficult to see directors instead, managers are more common. Therefore, their information needs are quite similar to directors. More to it, they required monthly, quarterly, biannual and annual reports from the firm’s accounting information to help them make all necessary decisions that have impact on the business.

Next, the types of external users and their information needs will be discussed.

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