Accounting communicates financial information, to decision makers. Different decision makers are users of these accounting information. Users of accounting information are collectively referred to as stakeholders. These stakeholders can be classified as internal and external users.
INTERNAL USERS
The internal users are those who make decisions that affect the internal operations of the company. They are the following:
MANAGERS they plan, organize and run business.
EMPLOYEES OR LABOR UNIONS they assess the company's profitability and stability, it's consequence on their future salary and job security.
OWNERS they provide the capital to the business. owners need these accounting information to help them decide whether they should withdraw or increase their investment.
EXTERNAL USERS
The external users of financial reports are those who make their decisions based on the company's financial information. they are the following:
POTENTIAL INVESTORS they need information to help them decide whether they should invest or not in the business.
CREDITORS AND POTENTIAL CREDITORS they assess the credit worthiness and the capability of the business to pay it's obligation including the related interest on maturity date. (nt. ito yung mga bank, o mga nagpapautang/ nagpapahiram ng pera para sa business)
CUSTOMERS they assess the financial position of their suppliers which is necessary for them to maintain a stable source of supply in the long term. They are interested to know whether the business will continue to honor it's products warranties.
TAX AUTHORITIES they use financial reports to determine the credibility of the tax returns filed on behalf of the company. They are interested to know if the business paid the correct amount of taxes.
REGULATORY BODIES they want to ensure that the company's disclosure of accounting information is in accordance with the rules and regulation set in order to protect interest of the stakeholders who rely on such information.
PUBLIC they use the financial information to know how the business helps the economy and whether employment is available in the company.
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ABM (BASIC ACCOUNTING)
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