USER OF ACCOUNTING INFORMATION

USER OF ACCOUNTING INFORMATION

Accounting Information refers to the information generated by the accounting system of an entity

relating to a particular accounting period. They disclose the operating results, and financial position of

the entity. It acts as a mirror of the financial performance of a concern.

The Framework discusses objective of financial statements, qualitative characteristics that determine

the usefulness of information contained in the financial statements, definition, recognition and

measurement of the elements from which financial statements are constructed and concepts of capital

and capital maintenance.

Users of Financial Statements and their Information Needs

1. Investors

Information need of the group primarily relates to decision making of buy, hold or sale of the entity’s

share. Also, dividend paying ability of the entity is a matter of interest.

2. Employees

Need to know about the stability and continued profitability of the employer which would ensure

payment of remuneration, employee opportunities and retirement benefits

3. Lenders

Interested in debt servicing ability.

4. Suppliers and other trade creditors

Interested in information about the entity’s ability in the short run to pay their dues. Of course, they are

interested in long run viability of the entity, if it is the major customer.

5. Customers

Seek information about the continuation of the entity in particular if the entity is the major supplier.

6. Government and their agencies


They have manifold interests like taxation, contribution of the entity in the employment generation and

economic activities of the nation and also the infrastructural facilities to be provided to serve the need

of the entity commensurate with its contribution to the society.

7. Public

Mostly interested in employment generation and societal contribution.

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