Accounting is the process of measuring, interpreting, and communicating financial information to support internal and external business decision.
Users of accounting information
Both people inside an organization and people outside an organization use accounting information to help them make business decision.
Owners, shareholders, potential investors, creditors use to evaluate operation of the firm to make investment decision.
Management use to plan and control
Employees, union officials use to use in contract negotiations.
Lenders, suppliers use to evaluate credit rating
Government agencies, economic planners, consumer groups use to evaluate tax liabilities to approve new issues of stocks and bonds.
The major users of accounting information are managers at a business, government agency, or not-for-profit organization. Accounting information helps them to plan and control daily and long-range operation.
Business owners and board of directors at not-for-profit groups also use accounting data to track managers’ process in operating the organizations.
Companies share sensitive financial information with their employees and teach them how to understand and use financial statements.
People who support open-book management believe their work contributes to the company success, which, in return, benefits the employees.
Outside a firm: potential investors evaluate accounting information to help them decide whether to buy a firm’s stock.
Bankers and other leaders use accounting information to evaluate a potential borrower’s finical soundness.
Eg: Canada Revenue Agency (CRA) and provincial tax officials use it to calculate a company’s tax liability责任. Citizen’s groups and government agencies use accounting information to access the efficiency.
Eg: Volunteer Income Tax Program (CVITP), organized by the CRA, 16000 volunteers help more than half million Canadians to complete