Parties Interested in Accounting Information:
Learning Objectives:
-
Explain, who may be interested
in accounting information of a company or firm?
There are a number of parties who are
interested in the accounting information relating to business.
Accounting is the language employed to communicate financial information
of a concern to such parties. The following are the groups who like to
make use of the accounting information. Owners:
The owner provides funds or capital for
the organization. They want to know whether their funds are being
properly used or not. They need accounting information to know the
profitability and the financial position of the concern in which they
have invested their funds. The financial statement prepared from time to
time from accounting records tell them the profitability and the
financial position. Management:
Management is the art of getting things
done through others. The management should ensure that the subordinates
are doing work properly. Accounting information is an aid in this
respect because it helps a manager in appraising the performance of the
subordinates. Accounting information provides "the eyes and ears to
management". Creditors:
Creditors are the persons who supply
goods on credit or bankers or lenders of money. They want to know the
financial position of a concern before giving loans or granting credit.
They want to be sure that the concern will not experience difficulty in
making their payment in time i.e., liquid position of the concern in
satisfactory. To know the liquid position, they need accounting
information. Employees:
Employees are interested in the
financial position of a concern they serve particularly when payment of
bonus depends upon the size of the profits earned. The demand for wage
rise, bonus, better working conditions etc. depends upon the
profitability of the concern and in turn depends upon financial
position. For these reasons, this group is interested in accounting
information. Government:
The government is interested in
accounting information because it wants to know earnings or sales for a
particular period for the purpose of taxation. Government also needs
accounting information for compiling statistics concerning which in turn
helps in compiling national accounts. Consumers:
Consumers need accounting information
for establishing good accounting control so that cost of production may
be reduced with the resultant reduction of the prices of goods they buy.
Sometimes, prices for some goods are fixed by the government, so it
needs accounting information to fix reasonable prices so that consumers
are not exploited. |
