Accounting - Users of Accounts
Users of accounts
The financial accounts provide a wealth of
information that is useful to various users of financial
information, as
summarised below:
These chapters are also helpful for you:
User
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Interest in / Use of Accounting Information
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Investors
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Investors are concerned about risk and
return in relation to their investments. They require information to
decide whether they should continue to invest in a business. They also need
to be able to assess whether a business will be able to pay dividends, and to
measure the performance of the business' management overall
|
Lenders
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Banks and other financial institutions who lend
money to a business require information that helps them determined whether
loans and interest will be paid when due
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Creditors
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Suppliers and trade creditors require information
that helps them understand and assess the short-term liquidity of a business.
Is the business able to pay short-term debt when it falls due?
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Customers & Debtors
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Customers and trade debtors require information
about the ability of the business to survive and prosper. As customers of the
company's products, they have a long-term interest in the company's range of
products and services. They may even be dependent on the business for certain
products or services
|
Employees
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Employees (and organisations that represent them
- e.g. trade unions) require information about the stability and continuing
profitability of the business. They are crucially interested in information
about employment prospects and the maintenance of pension funding and
retirement benefits. They are also likely to interested in the pay and
benefits obtained by senior management!
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Government
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There are many government agencies and
departments that are interested in accounting information. For example, the
IR&CE needs information on business profitability in order to levy and
collect Corporation Tax. Various regulatory agencies (e.g. the Competition
Commission and the Environment Agency) need information to support decisions
about takeovers and grants, for example.
|
Analysts
|
Investment analysts are an important user group -
specifically for companies quoted on a stock exchange. They require very
detailed financial and other information in order to analyse the competitive
performance of a business and its sector. Much of this is provided by the
detailed accounting disclosures that are required by the London Stock
Exchange. However, additional accounting information is usually provided to
analysts via formal company briefings and interviews.
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General public
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Interest groups, formed by various groups of
individuals who have a specific interest in the activities and performance of
businesses, will also require accounting information.
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