Learning Materials For Accounting, Management , Finance And Economics.

Saturday, October 31, 2009

External Users Of Accounting Information

Accounting provides the information which is useful for persons or groups inside or outside the organisation. Persons or groups outside the organization such as creditors, investors, government, research scholars etc.are known as external users.

External Users of accounting information :

1. Investors

Those who want to invest money in an organisation want to know the financial health of the organisation. They need accounting information which will help them in evaluating past performance and future prospects of the organisation.

2. Creditors 

Creditors means supplier of goods and services on credit , banks and lenders of money who want to know the financial position of a concern before providing loans or granting credit.They need accounting information relating to current assets , quick assets and current liabilities which is available in the financial statements.

                     Also Read: Internal Users Of Accounting Information

3. Members Of Non Profit Organisations  

Non profit organisations such as hospitals , clubs , schools, colleges etc. need accounting information to know how their contributed funds are being utilized. This information helps them to make decision regarding future support.

4. Government

Government wants to know earnings or sales for a particular period for the purpose of taxation. Income tax returns are examples of financial reports which are prepared with information taken from accounting.

5. Research Scholars 

Accounting information helps research scholars who wants to make a study into the financial operation of a particular firm.