The information is reported to a variety of different types of interested parties. These include business managers, owners, creditors, governmental units, financial analysts, and even employees. In one way or another, these users of accounting information tend to be concerned about their own interests in the entity.

Why external users need accounting information?

External users or Secondary users of accounting information include: Creditors – Creditors are interested in accounting information, because it enables them to determine the credit worthiness of the business. Trade creditor are generally interested in the accounting information for a short period of time than lenders.

What are the interests of external users in financial information?

External users are those individuals who take interest in the account information of an organization but they are not part of the organization’s administrative process. External users have a direct or indirect interest in accounting information.

Which external users of accounting information is most interested?

Banks and Financial companies are the external users of accounting information which is most interested in knowing the long term solvency position of the firm.

Why the government are interested in accounting information?

The government is interested in accounting information because it wants to know earnings or sales for a particular period for the purpose of taxation. Government also needs accounting information for compiling statistics concerning which in turn helps in compiling national accounts.

Why the following parties are interested in accounting information creditors?

investors are interested in accounting information because they want to know whether they earn profit or not. The government is intrusted in accounting information because they want to know that the society is developing or not.

How does government use accounting information?

Various Government agencies and departments like Registrar of Companies, Company Law Board and Tax Authorities, etc. use accounting information. They not only require it as a basis for tax assessment but also in evaluating how well various businesses are operating under law related requirements.

What is objective of Class 11 accounting?

Objectives of Accounting

• To maintain a systematic record of business transactions.
• To ascertain profit and loss.
• To determine the financial position.
• To provide information to various users.
• To assist the management.
• (1) Identifying financial transactions and events.
• (2) Measuring the transactions.

  Why government authorities are interested in the accounting information?

  Answer:investors are interested in accounting information because they want to know whether they earn profit or not. The government is intrusted in accounting information because they want to know that the society is developing or not.