What is the internel of user accounting information.

                          What is the internel of user accounting information.

Internal users of accounting

information are those persons or groups which are within the organisation.
Following are such internal users :

1. Owners. The owners provide funds for the operations of a business and
they want to know whether their funds are being properly used or not. They need
accounting information to know the profitability and the financial position of the
concern in which they have invested their funds. The financial statements prepared
from time to time from accounting records depicts them the profitability and the
financial position.

2. Management. Management is the art of getting work done through others,

the management should ensure that the subordinates are doing work properly.

Accounting information is an aid in this respect because it helps a manager in

appraising the performance of the subordinates. Actual performance of theemployees can be compared with the budgeted performance they were expected

to achieve and remedial action can be taken if the actual performance is not upto

the mark. Thus, accounting information provides "the eyes and ears to

management.

The most important functions of management are planning and

controlling. Preparation of various budgets, such as sales budget, production

budget, cash budget, capital expenditure budget etc., is an important part of

planning function and the starting point for the preparation of the budgets is the

accounting information for the previous year. Controlling is the function of seeing

that programmes laid down in various budgets are being actually achieved i.e. actual

performance ascertained from accounting is compared with the budgeted

performance, enabling the manager to exercise controlling case of weak

performance. Accounting information is also helpful to the management in fixing

reasonable selling prices. In a competitive economy, a price should be based on

cost plus a reasonable rate of return. If a firm quotes a price which exceeds cost

plus a reasonable rate of return, it probably will not get the order. On the other

hand, if the firm quotes a price which is less than its cost, it will be given the

order but will incur a loss on account of price being lower than the cost. So,

selling prices should always be fixed on the basis of accounting data to get the

reasonable margin of profit on sales.