Observation

Generally, in question 3, the candidates listed correctly the users of accounting information but some lost valuable marks in stating the areas of interests of the listed users.

Some of the suggested answers are:

Users of Accounting Information and their respective Interest

1. Management/Managers- Their interests are to know:
   • how the business is progressing;
   • the financial position of the business.
   • whether set targets are being achieved.
2. Owners/Shareholders- Their interests are to know
   • whether the business is profitable or not;
   • about the security of their investments;
   • whether the business can pay dividend;
   • whether to hold or sell their shares.
3. Bankers/Financial institution- They will need accounting information to:
   • assess the credit worthiness of the business;
   • evaluate the ability of the business to pay back when the facility is due.
4. Tax authorities- They need the information to:
   • assess the tax payable;
   • ensure that all relevant information has been captured in the financial statement.
5. Potential investors- They need accounting information to assess the viability of the business.
6. Competitors- Their interest is to assess the strength and weaknesses of other similar businesses to improve their operations.
7. Employees- Their interest are to:
   • evaluate the security of their jobs or long-term prospect of the business;
   • assess the ability of the business to continue paying their remuneration as and when due;
   • know their efficiency as workers;
   • have a basis for collective bargaining.
8. Regulatory bodies- Their interest is to ensure compliance with regulatory requirements and standards.
9. Trade unions- Their interest is to have basis for negotiating for improved conditions of services.
10. Customers/Debtors-Their interest are to:
    • determine the ability of the business to regularly meet their orders;
    • assess the ability of the business to offer them credit facilities.
11. Suppliers/Creditors- Their interest are to determine:
    • the ability of the business to pay its debt;
    • how long the business would take to pay its debt.
12. Financial analysts/Researchers- They need financial information for advisory and academic purposes.
13. General public: They need financial information to appraise the efficiency and social responsibility of the business.