Who Uses Accounting Information?

Accounting information is used by virtually everyone, in every job, at home and at work. Every time you get a bank statement or a credit card bill, it's accounting information. Every time you look at your homeowners' association annual budget, it's accounting. Every time you verify the charges on your dinner check, and add on a tip, it's accounting. When you do your taxes or fill out college loan applications, you are supplying accounting information. That's the everyday-life version. The business version is equally pervasive.

Most people use accounting information in their jobs every day. Whether you are ordering supplies, taking customer orders, buying stamps, or preparing the payroll, you are dealing with accounting information. All of these seemingly small pieces of accounting data add up to one big picture of how a company (or a household) is doing.

On the inside of a business, the people most likely to use that big-picture information are the owners, chief financial officers, and the accounting department. When it comes to outside users, the list is much bigger, especially for small-business owners. This varied group includes:

  • Bank loan officers

  • Tax authorities (federal, state, and local)

  • Anyone who might offer credit (such as a supplier)

  • Potential and existing investors

These different users all have different reasons for wanting to see the numbers. A bank loan officer wants to see that you have enough cash, not too much debt, and sustainable income. A tax authority wants to make sure that you have not miscalculated your taxable income or your income tax bill. Creditors look for a lot of the same things that bankers want to see, especially the cash-related figures. Investors tend to look for two separate things: current income that could be paid out in dividends, and the capacity for long-term growth that will cause their investment value to grow as well.

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