Neil Patel D1- Justify the application of accounting conventions and regulations to ensure that the financial statements
meet their user’s needs.
Main Users of Accounting Information:
Main users of Account Information could be either internal or external. The internal users make decisions that directly affect the
internal operations of the business The internal aspect will contain workers such as management and the employees of a
business. Whereas with the external side, they make decisions concerning the relationship of the business and also these
people are the investors, creditors, customers and even taxing authorities. Having access to accounting information is a
necessity for certain people for example; creditors, investors, management, taxing authorities and even the likes of employees
and customers. This is because each user has a different respective role with a different aim of what to achieve once looking at the accounting
information of a business. For example, a manager may use this information to figure out where their money is coming and going from at all
times as any expenses/incomes are recorded down on theirs statements.
Interests and requirements of the users:
Each user has their different reason to why they are using accounting information as they all have different jobs and different purposes. For
example: investors may use accounting information for analysing the possibility of investing in the company. Investors want to make sure they
can earn a fair return on their investment before they progress to commit any financial benefits towards a business. Another external example
would be the Regulatory Authorities who may use accounting information to ensure that the business’s disclosure of accounting information is
in up to requirements with the rules and regulations as they must be showing that they are running a business legally and within the restrictions
of the authorities. An internal example of a user is management, this is because they would like to analyse the way in which their
business is running and look at where their income and outcome is going. This is because they would make improvements through this
for future purposes and focus on turning their losses into potential profits.
Creditors:
Creditors are interested in accounting information, because it enables them to determine whether business is actually worthy of the
credit or not. The credit terms and standards are set on the basis of the financial situation of a business, so it helps the the creditors
analyse the business’s financial stature by using the accurate information accordingly. Creditors include suppliers and banks. Trade
creditors are usually interested in the accounting information for a short period of time compared to lenders.
Investors:The investors, who want to invest their money into a business, would obviously like to see the situation of the business as well as
the future plans. This is because they are investing their own capital towards the business and wish to see whether their money is going to be
put into a successful business plan, or a business which has already suffered major losses. Before investing their amount, potential investors
meet their user’s needs.
Main Users of Accounting Information:
Main users of Account Information could be either internal or external. The internal users make decisions that directly affect the
internal operations of the business The internal aspect will contain workers such as management and the employees of a
business. Whereas with the external side, they make decisions concerning the relationship of the business and also these
people are the investors, creditors, customers and even taxing authorities. Having access to accounting information is a
necessity for certain people for example; creditors, investors, management, taxing authorities and even the likes of employees
and customers. This is because each user has a different respective role with a different aim of what to achieve once looking at the accounting
information of a business. For example, a manager may use this information to figure out where their money is coming and going from at all
times as any expenses/incomes are recorded down on theirs statements.
Interests and requirements of the users:
Each user has their different reason to why they are using accounting information as they all have different jobs and different purposes. For
example: investors may use accounting information for analysing the possibility of investing in the company. Investors want to make sure they
can earn a fair return on their investment before they progress to commit any financial benefits towards a business. Another external example
would be the Regulatory Authorities who may use accounting information to ensure that the business’s disclosure of accounting information is
in up to requirements with the rules and regulations as they must be showing that they are running a business legally and within the restrictions
of the authorities. An internal example of a user is management, this is because they would like to analyse the way in which their
business is running and look at where their income and outcome is going. This is because they would make improvements through this
for future purposes and focus on turning their losses into potential profits.
Creditors:
Creditors are interested in accounting information, because it enables them to determine whether business is actually worthy of the
credit or not. The credit terms and standards are set on the basis of the financial situation of a business, so it helps the the creditors
analyse the business’s financial stature by using the accurate information accordingly. Creditors include suppliers and banks. Trade
creditors are usually interested in the accounting information for a short period of time compared to lenders.
Investors:The investors, who want to invest their money into a business, would obviously like to see the situation of the business as well as
the future plans. This is because they are investing their own capital towards the business and wish to see whether their money is going to be
put into a successful business plan, or a business which has already suffered major losses. Before investing their amount, potential investors
