Unit 2 : Who uses accounts and why?
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Accounts are widely used by many groups and for many reasons; you may be able to add to these lists.
Users of accounts
- Owners / Shareholders – to value their investments
- Managers – assist in control and decision making
- HM Revenue & Customs – agreeing tax liability
- HM Revenue & Customs – agreeing VAT liability
- Central statistical office – official statistics
- Investors – to oversee and/or value their investments
- Banks – to oversee and/or value their investments and loans
- Customers – can I rely on my supplier?
- Suppliers – will I be paid?
- Auditors – the figures to be audited
- General public / Journalists – public interest issues
- Trades Unions – negotiations / industry data
- Employees – information on what is happening to the business they work for?
- Potential employees – safe to work for?
- Pension funds / Fund managers – for potential investment
- Lobby Groups – to review and further their issues
- Authors of books on the subject – for materials and examples
Uses of accounts
- Showing the financial situation of the entity
- Demonstration of compliance to the law
- Reporting performance
- Managing performance
- Valuing an entity
- Demonstrating resources available
- Demonstrating capacity to do things
- Comparisons and benchmarking
- Support for raising finance
- Demonstration of probity
- Supporting tax computations
- Keeping investors (including banks) and potential investors informed
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