Read this article to learn about the following thirteen users of financial statements, i.e., (1) Shareholders, (2) Debenture Holders, (3) Creditors, (4) Financial Institutions and Commercial Banks, (5) Prospective Investors, (6) Employees and Trade Unions, (7) Important Customers, (8) Tax Authorities, (9) Government Departments, and Others.
1. Shareholders:
Divorce between ownership and management and broad-based ownership of capital due to dispersal of shareholdings have made shareholders take more interest in the financial statements with a view to ascertaining the profitability and financial strength of the company.
2. Debenture Holders:
The debenture holders are interested in the short-term as well as the long-term solvency position of the company. They have to get their interest payments periodically and at the end the return of the principal amount.
3. Creditors:
Potential suppliers of goods and materials and others doing business with the company are interested in the liquidity position of the company.
4. Financial Institutions and Commercial Banks:
These financial institutions are interested in the solvency – short-term as well as long-term – and profitability position of the company.
5. Prospective Investors:
Prospective Investors are interested in the future prospects and financial strength of the company.
6. Employees and Trade Unions:
Employees and Trade Unions are interested in the profitability position of the company.
7. Important Customers:
Important Customers who want to make long-standing contract with the company are interested in its financial strength.
8. Tax Authorities:
Tax Authorities are interested in the profits earned by the company.
9. Government Departments:
Government Departments dealing with the industry in which the company is engaged are interested in the financial information relating to the company.
10. Economists and Investments Analysts:
Economists and Investments Analysts are interested in the financial and other information of the company.
11. Members of Parliament:
Members of Parliament the Public Accounts Committee and Estimates Committee – are interested in the financial information of the government companies
12. SEBI and Stock Exchanges:
SEBI and Stock Exchanges are interested in the prospects and performance of listed companies with a view to protecting the interests of investors.
13. Managers:
Managers are interested in knowing through the financial statements the present position and future prospects of the company. This is mainly to review the company’s progress and position and take decisions for the future.
Comments are closed.
FAQs
The users of financial statements can include; Owners of a company, Company management, Investors/shareholders, Customers, Competitors, Government agencies, Employees, Investment analysts, Lenders, Suppliers/vendors, and General public.
Who are the main users of financial reports? ›
The users of financial reports include present and potential investors, employees, lenders, suppliers and other trade creditors, customers, governments and their agencies and the public. They use financial reports in order to satisfy some of their different needs for information, including the following.
Who are the primary users of financial statements? ›
Primary users of the financial statements are considered existing and potential investors, creditors, and lenders. Primary users obtain financial statement information and allow them to understand the overall health of the company such as its net cash flow status etc.
Who are the top 8 users of accounting information? ›
Users of Accounting Information
- Owners/Shareholders.
- Managers.
- Prospective Investors.
- Creditors, Bankers, and other Lending Institutions.
- Government.
- Employees.
- Regulatory Agencies.
- Researchers.
The financial statements are used by investors, market analysts, and creditors to evaluate a company's financial health and earnings potential. The three major financial statement reports are the balance sheet, income statement, and statement of cash flows. Not all financial statements are created equally.
Who are the main end users of financial statements? ›
Users of financial statements are management, creditors, bankers, suppliers, investors etc.
Who are the primary users of accounting? ›
The accounting process provides financial data for a broad range of individuals whose objectives in studying the data vary widely. There are three primary users of accounting information: internal users, external users, and the government (which is a specific form of an external user).
Who are the users of general purpose financial statements? ›
General purpose financial statements (GPFS) are a set of financial reports that are intended to be used by a wide range of users, including investors, creditors, regulators, and management. The most common general purpose financial statements are: the balance sheet. income statement.
Who are the internal users of financial statements? ›
Internal users are people within a business organization who use financial information. Examples of internal users are owners, managers, and employees.
Who are the external users of financial statements? ›
External users of information include present and potential Investors (shareholders), Creditors (Banks and other Financial Institutions, Debenture holders and other Lenders), Tax Authorities, Regulatory Agencies (Department of Company Affairs, Registrar of Companies), Securities Exchange Board of India, Labour Unions, ...
The generally accepted accounting principles (GAAP) are a set of accounting rules, standards, and procedures issued and frequently revised by the Financial Accounting Standards Board (FASB). Public companies in the U.S. must follow GAAP when their accountants compile their financial statements.
What are 5 elements of financial statements? ›
The major elements of the financial statements (i.e., assets, liabilities, fund balance/net assets, revenues, expenditures, and expenses) are discussed below, including the proper accounting treatments and disclosure requirements.
Who are the six-six users of accounting information? ›
The public, the government and its agencies, management, employees, lenders, suppliers, and other creditors in the business world are among the users of accounting information.
Who are the 7 users of financial information? ›
Read this article to learn about the following thirteen users of financial statements, i.e., (1) Shareholders, (2) Debenture Holders, (3) Creditors, (4) Financial Institutions and Commercial Banks, (5) Prospective Investors, (6) Employees and Trade Unions, (7) Important Customers, (8) Tax Authorities, (9) Government ...
Who are the 8 external users of accounting information? ›
Document Information
External users of accounting include investors, lenders, suppliers, customers, tax authorities, government, auditors, and the public.
Who are the users of the accounting statement? ›
Examples of internal users are owners, managers, and employees. External users are people outside the business entity (organization) who use accounting information. Examples of external users are suppliers, banks, customers, investors, potential investors, and tax authorities.
Who are the external users of the financial statement? ›
Users of external financial statements include, but are not limited to, government agencies, bond rating agencies, accrediting agencies, suppliers, creditors, and other interested parties external to the university.
Who are the users of financial statements class 11? ›
Balance Sheet− It depicts the true financial positions of a business that provides required information like assets and liabilities of a business firm, to the users of accounting information like owners, creditors, investors, government, etc.
