Groups of people Interested In Accounting Information

Shareholders:

Shareholders as owners are interested in knowing the profitability of the business transactions and the distribution of capital in the form of assets and liabilities. In fact, accounting developed several centuries ago to supply information to those who had invested their funds in business enterprise.

Management:

With the advent of joint stock company form of organization the gap between ownership and management widened. In most cases the shareholders act merely as renders of capital and the management of the company passes into the hands of professional managers. The accounting disclosures greatly help them in knowing about what has happened and what should be done to improve the profitability and financial position of the enterprise.

Potential Investors:

An individual who is planning to make an investment in a business would like to know about its profitability and financial position. An analysis of the financial statements would help him in this respect.

Creditors:

As creditors have extended credit to the company, they are much worried about the repaying capacity of the company. For this purpose they require its financial statements, an analysis of which will tell about the solvency position of the company.

Government:

Any popular government has to keep a watch on big businesses regarding the manner in which they build business empires without regard to the interests of the community. Restricting monopolies is something that is common even in capitalist countries. For this, it is necessary that proper accounts are made available to the government. Also, accounting data are required for collection of sale-tax, income-tax, excise duty etc.

Employees:

Like creditors, employees are interested in the financial statements in view of various profit sharing and bonus schemes. Their interest may further increase when they hold shares of the companies in which they are employed.

Researchers:

Researchers are interested in interpreting the financial statements of the concern for a given objective.

Citizens:

Any citizen may be interested in the accounting records of business enterprises including public utilities and government companies as a voter and tax payer.