Solution 1.3

List the various users of accounting information, describing their specific information needs.

Investors/Shareholders: Investors provide capital to the business Shareholders are the legal owners of the business.  Investors and shareholders use the accounting information to assess if the business provides a good return (profit) for their investment, and that the investment will survive into the future. 

Creditors / Suppliers: These are made up of other businesses that supply goods and service on credit. Creditors use the accounting information to ensure the business is a good credit risk and will pay its debts as they fall due. Thus they are primarily interested in the solvency and good name and reputation of the business.

The Government: The use and interpretation of accounting information is essential for government departments to implement and monitor state policy. Income tax, corporation tax, capital gains tax, stamp duty, VAT, PAYE and PRSI returns are all backed up by the accounts of the business.

Loan Providers: Banks and financial institutions use the accounting information to assess whether the firm has the ability to repay loans, plus the interest charged.

Employees.  Employees and their trade union representatives use the accounting information to assess job security, profitability and wage structures which is essential for wage negotiation.

Customers: Customers will be interested the accounting information of a business to assess the ongoing financial stability of the business and the risk of non-delivery or backup service.

The Public:  The general public, including communities and pressure groups, would scan the financial statements and reports of local businesses for information that would concern them.

Management: Management run the business and try to ensure that it is profitable and stable/solvent. They are interested in and responsible for every aspect of the business. Ultimately, managers require frequent, accurate, relevant information to plan and control business activities. They must ensure that the business is profitable, solvent (likely to remain in business), and run in an efficient and effective manner.