Users of Accounting information (Stakeholders)

Why do Accounting

Accounting is done for various reasons , including letting people and organisations know:

·         If they are making a profit or a loss

·         What their business is worth

·         How much cash they have

·         How wealthy they are

·         How much they are owed

·         How much they owe someone else

·         Keeping a financial check on the things they do

·         Legal obligation to check tax liabilities

·         Helping control expenses

·         Obtaining loans

Possible users of accounting information include internal and external users.  Internal are those inside the business whilst external are outside: -

Internal

·         Managers – to assess performance, plan for the future, make decision and claim bonuses

·         Owner(s) of the business - to assess profitability and liquidity,

·         Employees – to assess job security or pay rises

External

·         A prospective buyer  - is business worth the price being asked

·         The bank – assess risk of any loan and interest rate

·         HMRC – to charge the correct amount of tax

·         Credit Supplier – to assess whether the firm has good enough liquidity to repay its debt to them

·         Customers – to check their orders placed will be received in due course