Business Studies – 5.5.3 Users of accounts | e-Consult
5.5.3 Users of accounts (1 questions)
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Internal users are individuals who work within the business. They have direct access to the business's operations and are directly affected by its performance. External users are individuals or organizations outside the business who have no direct involvement in its operations. They rely on the accounts to assess the business's performance and financial health.
Here's a breakdown:
| User Type | Key Information Needed | Reason for Need |
| Managers | Profit & Loss Account, Balance Sheet, Budget vs. Actual figures, Performance Reports. | To monitor performance, make operational decisions, control costs, and plan for the future. They need to understand profitability, efficiency, and financial position. |
| Employees | Job security, wage levels, company performance (indirectly through news and announcements). | To assess the stability and success of the company, which impacts their job security and potential for future earnings. |
| Owners (Sole Traders, Partnerships, Shareholders) | Profit & Loss Account, Balance Sheet, Financial Ratios. | To assess the profitability, financial stability, and overall value of their investment in the business. They need to understand the business's performance and potential for future returns. |
| Banks | Balance Sheet, Profit & Loss Account, Cash Flow Statement. | To assess the business's ability to repay loans. They need to understand the business's financial stability, profitability, and ability to generate cash. |
| Tax Authorities | Profit & Loss Account, Balance Sheet, Tax Returns. | To determine the amount of tax owed by the business. They need accurate financial information to ensure compliance with tax regulations. |