IGC-L28 — Users of Accounting Information
Understanding who uses accounting information and how it supports decision-making.
Learning Objectives
- identify different users of accounting information
- explain the needs of each user group
- apply knowledge to examination-style questions
- evaluate the usefulness of accounting information
Concept Framework
What are Users of Accounting Information?
Users of accounting information are individuals or groups who rely on financial data to make decisions about a business.
These users may be:
• internal users (within the business)
• external users (outside the business)
Internal Users
Owners
Owners use accounting information to:
• assess profitability
• evaluate return on investment
• make business decisions
Managers
Managers use accounting information to:
• plan operations
• control costs
• make strategic decisions
External Users
Banks and Lenders
Use accounting information to:
• assess ability to repay loans
• evaluate financial stability
Suppliers
Use accounting information to:
• assess creditworthiness
• decide whether to supply goods on credit
Employees
Use accounting information to:
• assess job security
• evaluate business performance
Government
Uses accounting information to:
• assess tax liabilities
• ensure compliance with regulations
Investors
Use accounting information to:
• evaluate profitability
• decide whether to invest
Summary Table
User Purpose
Owners Profitability, return on investment
Managers Planning and control
Banks Loan repayment ability
Suppliers Creditworthiness
Employees Job security
Government Tax and compliance
Investors Investment decisions
Application Structure (Exam Technique)
For “Explain” questions, use:
Worked Examples
Banks use accounting information to assess the financial position of a business.
This helps them evaluate whether the business can repay a loan.
Therefore, they can decide whether to provide credit.
📌 Additional structured questions are available in the
🎯 Question Papers + YouTube Explanation section.
Students should practise explanation-based questions regularly.
Structured Practice
Level 1 – Concept Check
Define users of accounting information.
State one internal user.
State one external user.
Level 2 – Application Practice
Explain how a supplier uses accounting information.
Level 3 – Examination Style Question
Explain two users of accounting information and how they use it.
(4 marks)
📌 Additional questions are available in the 🎯 Question Papers + YouTube Explanation section.
∗ Additional questions are available in the Question Papers and YouTube Explanation section. Students should practise journal corrections and Suspense Account preparation regularly and review video explanations for procedural clarity.
Enrolled students may submit questions from recognised textbooks, past examination papers or other genuine academic material for expert clarification through the Student Doubt Support facility.
Proficiency Check
Learn – Unlearn – Relearn Approach
Students who believe they understand this topic should attempt:
- Explain why managers need accounting information.
- Explain how employees use accounting information.
- Explain one limitation of accounting information.
If unsure, revisit the lesson.
Detailed Activity Solutions
Solution
A supplier uses accounting information to assess the financial position of a business.
This helps determine whether the business is able to pay for goods on credit.
Therefore, the supplier can decide whether to extend credit.
How This Topic Appears in the Examination
This topic commonly appears through:
• explanation questions (2–6 marks)
• identification of users
• evaluation questions
Examiners frequently assess:
• correct identification of users
• clear explanation of use
• logical link to decision-making
Students should practise structured answers and review video explanations.
Enrolled students may submit questions from recognised textbooks, past examination papers or other genuine academic material for expert clarification through the Student Doubt Support facility.
Self-Assessment Checklist
- I can identify users of accounting information
- I understand their needs
- I can answer explanation questions clearly
- I can apply the “User → Use → Decision” structure
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