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Internal Users
  1. Definition of internal users
  2. Who are the internal users of accounting information?
  3. The need for accounting information
  4. External users
 
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Internal Users
Who are internal users?

Definition

Internal users refer to the members of a company's management and other individuals who use financial information in running and managing the business. They work within the company and make decisions for the business.

Who are the internal users of accounting information?

The internal users of accounting include all individuals within the company who utilize financial information in making decisions for the business. Internal users include all levels of management:

The Need for Accounting Information

Accounting information is important in all levels of management. The top managers need information about the company's past performance to be able to make decisions about the future of the company. They need information to evaluate the result of their past decisions. The financial statements will show the company's performance and financial position and will guide them in coming up with decisions for the future.

Middle level managers also need accounting information in managing their department, division, or branch. For example, a branch manager may find that his branch has been on constant losses for the past months. Accounting is able to provide the facts and figures to determine the cause of such losses and ultimately, find a solution for them. The branch could decide on cutting down certain expenses, increasing selling prices, or whatever would be best based on given information.

Lower level managers oversee the day-to-day operations of the business. They make daily decisions. How many should the factory produce for the day? How many raw materials will be needed for the next day? Do we have enough inventory? These are some of the decisions that require accounting information.

External Users of Accounting Information

External users do not participate in the operations of the company. They do not make decisions for the business, however, they are interested in the company's financial information for some other purposes. External users include: banks and financial institutions, suppliers, customers, tax authorities and other government institutions, investors, and the general public.

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Internal Users - Accounting Dictionary (2022). Accountingverse.
https://www.accountingverse.com/dictionary/i/internal-users.html
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