Accounting can be said to be a process that collects, collate, record, analyse, interpret and communicate financial information to end users in the form/ format that they will understand.
Accountancy is the only language that businesses all over the world understand. And for you to be a better business person, you have to know how to speak, write, read, and understand this language of business. There are many people that rely on accounting as a profession to provide them with much needed information to make an informed economic decision.
Users of accounting information system
The following are the users of accounting information system;
Shareholders of a company: Company’s shareholders are the real owners of a business and needs information from those that manage the business on their behalf.
Government: It is the duty of government to protect lives and property and in so doing will need information concerning every facet of her jurisdiction. Information from businesses in the form of financial report will help government properly formulate her strategic plan.
Suppliers/ Creditors: Suppliers and creditors of a company need information concerning the financial position of a company. They need to be convinced that the company is liquid enough to meet with her obligations upon maturity.
General public: The general publics will some time need information about the finance of a company in order to protect their interest.
Students: students need information about company’s finance to take some decisions that relates to courtesy visit and demand for bursary
Employees: Employees and lower cadre managers are only interested in a company’s financial statements because they want the safety of their daily bread. They may also want increase in wages and salaries.
Management: Management in this context are the top level managers and they have similar interest with ordinary managers. The only difference is that management also need this information to make economic decision that concerns the running of the business.
Tax authority: They are only concerned about the returns that comes to them in the form of tax revenue.
Trade union: Their concern is to seek a fair wage for their members. Knowing what a company is making will give them an insight of what to agitate for as fair wage
Professional bodies: Professional bodies need accounting information as a tool that will be used to educate her members.
Potential investors: For potential investors to be in a position to make investment decision some analysis has to be made and this can only be made from accounting information.
What exactly do these groups of people do with this information when it is at their disposal? The simple answer is to make an informed economic decision.
Now tell me, will the need of all people be met if there is no form of system in place to help gather this information and put it in a format that is consumable by the end user?
Hence, the use and the need of accounting information system in business community is therefore to provide accounting information that can meet informational needs of the stakeholders of a business.
If you have any question that is not answered by this post, feel free to drop me a comment as I will do my best to provide a tailored answer to your question.