Accounting plays a very important role in all businesses but it is not just the business itself that finds accounting information useful. There are other stake holders who rely on accounting information to make decisions. These stakeholders include:
1. Shareholders - Shareholders use the balance sheet and profit and loss account produced by limited companies to decide if they are going to increase or decrease their holding.
Head Boards
2. Management - Management in every level of the business from director level to supervisor level rely on accounting information to do their job properly. They all use the same information for different purposes. For example, directors use it for strategic purposes and middle management can use it to see if they are meeting their financial targets.
3. Suppliers - Along with other data suppliers will look at a company's balance sheet and profit and loss account to see if and how much credit they are willing to give to present and potential customers.
4. Lenders - Similar to suppliers lenders also need to make sure a company is in a healthy financial situation before they start to lend money.
5. Government - Governments use the information provided by a company about its finances to levy tax on the profits.
6. Customers - Before another company becomes a customer or enters into a joint venture, they will look at the company's finances to make sure the company is not in trouble and that their supplies are not about to dry up.
7. Employees - Employees also have an interest in how well their employer is doing so use financial accounting information for this purpose.
Users of Accounting Information
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