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Users of Accounting InformationThe accounting process provides financial data for a broad range of individuals whose objectives in studying the data vary widely. Three primary users of accounting information were previously identified, internal users, external users, and government/IRS. Each group uses accounting information differently and requires the information to be presented differently. Internal UsersAccounting supplies managers and owners with significant financial data that is useful for decision making. This type of accounting is generally referred to as managerial accounting. Some of the ways internal users employ accounting information include the following:
External UsersTypically called financial accounting, the record of a business’ financial history for use by external entities is used for many purposes. The external users of accounting information fall into six groups; each has different interests in the company and wants answers to unique questions. The groups and some of their possible questions are:
Some of the ways external users employ accounting information include the following:
General-purpose financial statements provide much of the information needed by external users of financial accounting. These financial statements are formal reports providing information on a company’s financial position, cash inflows and outflows, and the results of operations. Many companies publish these statements in annual reports, also known as a 10-K or a 10-Q (quarterly report). The annual report contains the independent auditor’s opinion as to the fairness of the financial statements, as well as information about the company’s activities, products, and plans. Typically, the best place to find these reports for a public company can be on their website under the Investor relations section. Financial statements used by external entities are prepared using generally accepted accounting principles, or GAAP. We will discuss the language of GAAP further in later sections. Government/IRSGovernment agencies that track and use taxes are interested in the financial story of a business. They want to know whether the business is paying taxes according to current tax laws. The language in which tax-related financial statements are prepared is called IRC or Internal Revenue Code. Tax preparation will be outside the scope of this course. Important Points to Remember
1.3: Users of Accounting Information is shared under a not declared license and was authored, remixed, and/or curated by LibreTexts. Who are the users of managerial accounting information?Managerial accounting. focuses on internal users—executives, product managers, sales managers, and any other personnel within the organization who use accounting information to make important decisions.
What type of users use managerial accounting?Managerial accounting focuses on internal users of accounting information. These internal users include executives, product managers, sales managers, and any other company personnel who use accounting information to make decisions.
What are the 4 users of accounting information?Users of Accounting Information and their Needs: The public, the government and its agencies, management, employees, lenders, suppliers, and other creditors in the business world are among the users of accounting information.
What are 3 users of accounting information?Following is the list of Users of Accounting Information. Owners/Shareholders.. Managers.. Prospective Investors.. Creditors, Bankers, and other Lending Institutions.. Government.. Employees.. Regulatory Agencies.. Researchers.. |