Course: ACCT101 [Dr. Naim Hassan El-Sayed]
NYIT – Abu Dhabi, U.A.E.
Users of Accounting Information and their needs4
Users of accounting Information and responsibilities of accountant4 External Users6
The needs of accounting information7
External users of accounting information (especially investors) use accounting information like annual and quarterly reports to base their investing decisions on, and to compare different companies with one another. Internal users of accounting (mostly managers) use internal accounting information in order to plan for the future. Therefore accounting information is not only vital to the one's individual business or investments but is also of great benefit to the wider society and the world at large. In addition to which this will allow each country to organize their funds in a more systematic approach as such making room for development of one's country and the upward social mobility of the people of that specific country. In all simplicity, accounting information prepares us for the future
Users of Accounting Information and their needs
The product of accounting is accounting information. Accounting information is used in deciding between different courses of action and results in informed decision making. It serves to reduce the uncertainty inherent in the business environment where decisions are made about the future. It further reduces entropy based on the assumption that chaos exists where there is no information. This implies that the greater the uncertainty or entropy, the more accounting and other information are required. At first glance, accounting can appear extremely complicated and confusing. The untrained eye may struggle to grasp the entire nature of accounting and see it merely as an incomprehensible mass of numbers. However, accounting is actually much more for a company. Accounting "is an information system that measures, processes, and communicates financial information about an identifiable economic entity" (Kanter & Pressley, n.d., Slide 1-7). Furthermore, this information is designed to make it easier for individuals with an interest in an organization to make better decisions about that particular entity (Wild, Larson & Chiapetta, 2007, p. 5). As a result, I strongly believe that the true significance of accounting cannot be fully appreciated without first examining all the different individuals who actually use this information. Users of accounting Information and responsibilities of accountant Overall, the users of accounting information can be separated into two distinct groups: (1) internal users of accounting information and (2) external users of accounting information (Sweatt, 2002; Wild, Larson & Chiapetta, 2007, p. 5). External users can further be divided into two subgroups: (1) "those with direct financial interest" in a firm and (2) "those with indirect financial interest" (Kanter & Pressley, n.d., Slide 1-27). In the end, accounting information is invaluable to all of these users. Probably the first type of users of accounting information that comes to mind is external users. This group is made up anyone outside an organization that uses accounting information to make financial decisions (Wild, Larson & Chiapetta, 2007, p. 5). As I previously mentioned, this group is made up of two subdivisions. Examples of outside individuals/entities that are directly affected by a company's finances include investors, stockholders, and creditors since they put their money at risk with investments into a business. On the other hand, other external users have a much more general interest in an organization and include customers, suppliers, the press, and regulators...