Get to know the different Users of Accounting Information
This may seem unreal, but everywhere we go, people are using accounting information. From the simplest business transactions to the most complex corporate dealings, accounting info is used. At work, school, the shopping mall, even at our own homes, accounting information could be important.
So, who uses accounting information? Accounting information users could be divided into 7 major classifications which could be easily be remembered using the acronym PLEGICS. This stands for Public, Lenders, Employees, Government, Investors, Customers/Clients/Consumers, and Suppliers (trade creditors). Let us then discuss each user and find out why they need accounting information.
Everybody needs accounting information in one way or another. There will be times when we want to know the status of our economy, we would like to know what's happening with our favorite mobile network, we want to know the status of retirement plants, sometimes, we make budgets and thus use accounting information, we also monitor receipts and disbursements and many more.
Lenders are those who loan their money to people in need of funds. Because of the nature of their operations, lenders are interested in accounting information that enable them to determine the ability of a client to pay their obligations and the interest that comes with the loan when it becomes due.
Accounting information is essential if you are an employee assigned in the accounting, finance or sales department. However, accounting information far go beyond those departments. Employees need accounting information no matter where they are assigned. That's because they still deal with financial transactions in one way or another. For instance, salaries received is a financial transaction. An employee needs to make sure that the salary he or she receives is of the right amount. The same goes with bonuses and other benefits.
The government is one huge and complex organization. It is in charge of running a country and making it a suitable place to live in for its citizens. The government has thousands of transactions every single day. In order to manage its transactions, it needs accounting information during its day-to-day operations. Accounting information is needed during tax assessments, determination of license fees, preparation of annual budget, computation of salaries, economic assessment, and many many more.
Investors use their money in order to start or join businesses in order to gain profit. These investors and businessmen use accounting information to make relevant decisions. Investors could determine whether to purchase stocks, sell stocks enter into a business venture, and can make other decisions based on accounting information. The success or failure of an investor and businessman is dependent on the quality of accounting information provided to them.
The continuity of a business is important to customers. Therefore, customers need accounting information in order to determine the longetivity of a business. This is important most especially when the customer is dependent on the business specifically if there is long-term engagement between the parties. Through accounting information, clients and customers of a business enterprise could also check if prices that are being charged are reasonable.
Suppliers or otherwise known as trade creditors are providers of merchandise inventory (goods). Suppliers either sell their merchandise on cash or on installment basis. Before extending credit to customers, suppliers first use accounting information by looking into the accounting records of an entity to determine if they would sell their products on account or not. Suppliers are similar to lenders wherein they are concerned whether their client would be able to pay their liabilities.