The following article will describe who the users of accounting information of businesses are as well as define each group of users. This will include the responsibilities of the business accountant in relation to each user group.

In business, accountants play a very important role as far as keeping and maintaining financial records having to do with the company or by the individual who employs them. 

Information accountants are responsible for keeping track of are the companies balance sheets, which is the company’s assets equal to liabilities plus owners equity, the company’s income statements, which is the company’s revenue minus expenses equaling the company’s net income.  In addition, another record a business accountant is responsible for are the owners equity statement, which is the capital recorded for sole proprietors and partners or the common, preferred stock, and retained earnings of the corporation.  Lastly, the statement of cash flow shows a record of cash coming in as well as out of the business.  Accounting information such as balance sheets, income statements, owner’s equity statements, and cash flow statements are necessary records kept to ensure that the company recorded is keeping up to date records and are not falsifying documents.  (Module 1, 2009)

Read more in Accounting
« Financial vs. Management Accounts
Employee Handout: Understanding the Accounting Cycle »

The users of this accounting information are split up into two categories, which are external users and internal users.  External users include shareholders, lenders, consumer groups, external auditors, customers, and government agencies; whereas the internal users are users within the company such as managers, internal auditors, sales staff, budget officers, controllers, officers, and directors.  For each user or category mentioned, the business accountant is responsible for supplying information in relation to each of the groups accordingly.

The external users would receive limited financial information from the target company, such as general-purpose financial statements; these statements have just enough information to inform external users of the company’s economic position.  General-purpose statements are in the area of financial accounting, which is the type of accounting aimed at supplying information to users not directly affiliated with the target company.  

For the stockholders, which are individuals and or a group of investors who have interest in the company, the account must supply the above-mentioned statements so that the investors and or stockholders can assess the risk as well as potential gain of the company’s position in the stock exchange.

Lenders such as investors, banks and other financial institutions are interested in such statements for the fact if they were to lend the company money they would need to asses that the company would be able to afford to repay loaned money plus the interest that would be due.

Employees need to use the statements to figure out and compare prospected as well as current employers to see whether or not they are being paid fairly.  A company’s consumers are interested in learning whether or not the company will be around long enough to maintain a continuing product or service supply to their client base.  Company suppliers need the company’s financial data, so they can judge whether they should issue a credit line to the business or not.  Government agencies, such as the Internal Revenue Service as well as other tax services used the company’s financial reports to measure whether the company is paying their taxes up to date as well as independent auditor monitors, reports, making sure they meet GAAP or General Accounting Accepted Principles.  (Wild-Larson-Chiappetta, 2007, p. 6)

Internal users or users directly affiliated with the company use managerial accounting, which includes in-depth reports used to determine financial strengths as well as weak points.  These reports help aid in the decision making process within the separate departments of a company.  (Wild-Larson-Chiappetta, 2007, p. 6)  For example, Human Resource managers have to ensure the rights of their employee by using wage information along with other data.  On the other hand, a Sales Manager may need to review financial statements to assess sales people are making their quota and so on.

In conclusion, accounting information is imperative to running a respectable business to ensure the integrity of the company as well as the company’s responsibility to it consumers, employees and other external sectors.  The information reported in the financial statements supplied by the companies accountant must meet general accounting accepted principles (GAAP)  in order for the company to stay in business. Financial statements also help a company further its successes by monitoring its strengths and weakness as well as keep an organization running smoothly, while maintaining high compliance standards.

  References

1.      Module 1. (2009). Retrieved April 3, 2009, from Colorado Technical University Web site: http://https://campus.ctuonline.edu/classroom/CoursePlayer/CoursePlayer.aspx?classid=209889&tid=54

2.      Wild-Larson-Chiappetta. (2007). Accounting in business. In Fundamental Accounting Principles (18th ed., p. 6). The McGraw-Hill Companies.