Users of Accounting Information

Your shop's accounting records aren't just for you. Surprise! Many people want to peek at your financial statements. Let's meet them.

The Cast of Characters

Think of accounting information as a Bollywood movie. Everyone watches it for different reasons:

• Producer (Owner): "Am I making money?"
• Distributors (Creditors): "Will I get my payment?"
• Audience (Customers): "Is this company reliable?"
• Tax Department: "Pay your taxes correctly!"

1. Internal Users (Inside the Business)

Owners/Shareholders

Question: "Is my investment safe? Should I invest more?"

Example: Mukesh Ambani checks Reliance's quarterly reports:

• Net Profit: ₹15,000 Crores ✅ → "Good, let's expand Jio."
• Losses: ₹2,000 Crores ❌ → "We need to cut costs."

Management

Question: "Which department is performing well? Where to cut costs?"

Example: Flipkart's CFO analyzes:

• Electronics division profit: +25%
• Fashion division profit: +5%
• Decision: Invest more in electronics!

Employees

Question: "Is my job secure? Can I get a raise?"

Example: TCS employee checks annual report:

• Revenue grew 20% → "Company is doing well, I'll ask for a promotion."

2. External Users (Outside the Business)

Investors (Potential Shareholders)

Question: "Should I buy shares of this company?"

Example: You want to invest in Tata Motors.

• Check their balance sheet: Strong assets, manageable debt ✅
• Check profit & loss: Consistent profits for 5 years ✅
• Decision: Buy 100 shares!

Creditors/Suppliers

Question: "Will they pay me back?"

Example: A milk supplier wants to supply to Amul on credit.

• Checks Amul's balance sheet
• Sees: Current Assets > Current Liabilities ✅
• Decision: "Safe to give credit!"

Banks & Financial Institutions

Question: "Should we give them a loan?"

Example: You apply for ₹10 Lakh business loan.

• Bank asks for 3 years' balance sheets
• Sees consistent profit, good assets
• Loan approved! 🎉

Government & Tax Authorities

Question: "Are they paying correct taxes?"

Example: Income Tax Department notices:

• Your sales: ₹50 Lakhs
• Tax paid: ₹50,000
• Flag raised! "Show us detailed accounts."

Customers

Question: "Is this company stable? Will they deliver?"

Example: You want to book a flat from a builder.

• Check their financial health
• See huge debts, declining profits ❌
• Decision: "Let me find another builder."

Competitors

Question: "How are they performing? What's their strategy?"

Example: Zomato checks Swiggy's annual report:

• Swiggy's marketing spend: ₹500 Crores
• Zomato: "We need to increase our budget too!"

Researchers & Students

Question: "How do successful companies operate?"

Example: MBA student writes thesis on:

• "Profit trends in Indian e-commerce (2015-2024)"
• Uses Amazon India, Flipkart financial data

Information Needs - Quick Reference

User	Primary Question	Key Document
Owner	"Am I making profit?"	Profit & Loss Account
Investor	"Should I invest?"	Balance Sheet, P&L
Bank	"Can I give loan?"	Balance Sheet, Cash Flow
Tax Dept	"Correct tax paid?"	Profit & Loss, Returns
Supplier	"Will they pay?"	Balance Sheet
Employee	"Is job secure?"	Profit & Loss
Customer	"Will they deliver?"	Balance Sheet

Real-Life Story: Satyam Scam (2009)

Background: Satyam Computer Services showed fake profits for years.

Who Got Affected?:

1. Investors: Lost ₹14,000 Crores in share value crash
2. Employees: Thousands lost jobs
3. Creditors: Worried about payments
4. Government: Tax evasion case filed

Lesson: Accounting information affects EVERYONE.

Internal vs External Users

Aspect	Internal Users	External Users
Access	Full access to all records	Only published reports
Detail	Very detailed	Summary only
Frequency	Daily, monthly	Quarterly, annually
Purpose	Day-to-day decisions	Investment/credit decisions
Example	Manager checking daily sales	Investor checking annual report

Why Different Users Need Different Information

Scenario: Ram's Electronics Shop

Ram (Owner) wants:

• Daily sales report
• Which product sells most
• Employee performance

Bank (for loan) wants:

• Last 3 years' profits
• Assets owned
• Existing debts

Income Tax wants:

• Total income
• Expenses claimed
• Tax calculation

Supplier wants:

• Can Ram pay bills on time?
• Current assets vs liabilities

Same business, different questions!

7-Day Action Plan

Day 1: Make a list: Who might need YOUR financial information? (If you're a student: parents, scholarship committee)
Day 2: If you run a business, imagine you're applying for a bank loan. What would they ask?
Day 3: Check any public company's annual report (like Reliance, TCS). Notice how detailed it is!
Day 4: List 3 internal users and 3 external users for a hospital business.
Day 5: Read about one business scandal (Satyam, Vijay Mallya). See how bad accounting affected everyone.
Day 6: If you're job hunting, check your target company's financial health online.
Day 7: Understand: Accounting isn't just numbers. It's trust.

Quiz

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💡 Final Wisdom: "Every rupee you record today might be read by a bank manager tomorrow, a tax officer next month, or an investor next year. Write accounts like everyone is watching – because they are!"