Accounting Overview

Accounting Overview


  1. Who are the primary users of accounting information, and what are their needs?&nbsp

Primaryusers, also known as internal users of accounting information includethe management, employees, and the owners (Demski,2008).

  • Management: they analyse the position and the performance of the organisation, as well as act appropriately to improve the organisation.

  • Employees: they assess the profitability of the company and its impact on the job security and future remuneration.

  • Owners: they analyse their investment profitability and viability. In addition, they determine any action to take in the future.

  1. Who are the external users of accounting information? How do they use this information?

Secondaryusers, also known as external users of accounting information are thecreditors, tax authorities, investors, customers, and regulatoryauthorities (Demski,2008).

  • Creditors: they use accounting information to determine the organisation’s credit worthiness. They also use the information to set terms of credit based on the financial health of the customers.

  • Tax authorities: they use the accounting information to evaluate the credibility of the tax returns.

  • Investors: they analyse the organisation’s feasibility of investing and ensure they can earn reasonable return before committing their financial resources to the organisation. They use the accounting information to determine whether they can invest in the company.

  • Customers: they assess the financial position of the supplies in order to maintain a stable supply for a long time.

  • Regulatory authorities: they ensure the disclosure of accounting information follow the organisation’s rules and regulations.

  1. What is management accounting and how can this information help internal users? How would Human Resources use this information?

Managementaccounting is the process of preparing management accounts andreports in order to come up with accurate and timely statistical andfinancial information that managers use for the day-to-day decisionswithin an organisation. Demski(2008) defines management accounting as the process of communicatingthe organisation’s financial information to the users. Thisinformation helps the internal users to make better financialdecisions. Correspondingly, the human resource also uses accountinginformation to gauge future remuneration and job security.


Demski,J. S. (2008).&nbspManagerialuses of accounting information.New York: Springer US.