Accounting data is used by a wide range of individuals and organizations for decision-making, analysis, and reporting purposes. The main users can be classified into two categories: internal users and external users.
Internal Users
- Management
- To make strategic and operational decisions.
- For budgeting, forecasting, and evaluating the company’s financial performance.
- Employees
- To understand the company’s financial health, job security, and potential for salary increases or bonuses.
- Owners/Shareholders (in small businesses)
- To assess profitability and the return on their investments.
External Users
- Investors and Shareholders
- To evaluate the company’s performance and decide whether to buy, hold, or sell shares.
- Creditors and Lenders
- To assess the company’s creditworthiness and ability to repay loans or debts.
- Suppliers
- To ensure the company can meet its obligations for goods or services purchased on credit.
- Government and Regulatory Authorities
- For tax compliance, regulatory requirements, and financial oversight.
- Potential Investors
- To determine whether the business is worth investing in.
- Auditors
- To verify the accuracy of financial statements and ensure compliance with accounting standards.
- General Public and Researchers
- To understand the company’s role in the economy or as part of research projects.
- Competitors
- To benchmark against industry standards and assess market positioning.
